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KHC Offers $10,000 Down Payment Assistance to Homebuyers

KHC Offers $10,000 Down Payment Assistance to Homebuyers

KHC Down Payment Assistance

One of the biggest challenges for home buyers is saving for a down payment. For many, this is what holds he/she back from purchasing a home. Luckily, the Kentucky Housing Corporation has announced some news that should make anyone struggling to save for a down payment happy!

The Kentucky Housing Corporation (KHC) is offering $10,000 in down payment assistance to homebuyers! This down payment assistance program is called Hardest Hit Fund (HHF) Down Payment Assistance (DAP) and it is available as of today, 1/11/17

According to the KHC website, this down payment assistance has a ZERO percent interest rate IF you are a first-time homebuyer. This down payment assistance is a non-refundable second mortgage in the amount of $10,000 (KHC,2017). In order to take advantage of this down payment assistance, you must be purchasing a home in Jefferson, Hardin, Christian, or Kenton counties. This home must be previously occupied, meaning NO new construction homes. 

If you are planning on taking advantage of this incentive, you will need to speak with a KHC-approved lender, which the Hollinden Team can refer to you. These funds always run out super quick. If the down payment assistance is something you would like to take advantage of, you really need to act fast. Call the Hollinden Team today: (502) 429-3866. For more information on KHC down payment assistance, please visit the Kentucky Housing Corporation website

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What is a FHA 203k Renovation Loan?

203k Rehab Mortgage Insurance

A few years ago, Steve Dobbs wrote about his experience obtaining a 203k rehab loan. Steve purchased a rehab property and obtained a 203k loan for the repairs. We are going to touch on the topic more in our latest blog.

The Federal Housing Administration (FHA) provides both limited 203k rehab mortgage and 203k rehab mortgage insurance. Both loans are available to homeowners to provide financing on the purchase of a home as well as financing on renovations on homes.

To obtain 203k rehab mortgage, the home must be at least one-year-old. The renovation can be as little as $5,000 worth of work and all the way up to a complete rehabilitation of the whole home. This loan option would be good for a home that needs extensive work. Make sure to visit the U.S. Department of Housing and Urban Development (HUD) website to find out more about home improvement activities that are approved. There is also an FHA mortgage limit per area that borrowers must meet. You can find out the limit on the HUD website. 

According to HUD, once the repairs are complete on the home, the value of the home will be determined by adding the purchase price to cost of renovations or by calculating 110 percent of the appraised value after renovations. Whichever of these two options is less is the option that will be used. 

Limited 203k loans would be a good option for a home that needs $35,000 or less in repairs. When Steve obtained a 203k loan, he closed, the work was done, an appraiser came out to see that the work was finished, then the remainder of funds were released to the contractor. Appraisal are usually more expensive on rehab loans because you have to get a dual appraisal (an appraisal upon purchase and an appraisal with estimated repairs). 

Limited 203k loans and 203k rehab mortgage must be used on a primary residence. This means that you couldn’t use this mortgage insurance on a vacation home or investment property.

Although a 203k loan is an FHA loan, sometimes it can take a little longer to close. This isn't always the case but sometimes it is. Also, 203k loans sometimes require borrowers to provide a lot more paperwork than your average home loan. 

If you have any questions regarding 203k Rehab loans, please contact the Hollinden Team at 502-429-3866. If you would like to speak to a lender regarding obtaining a 203k loan, we have a lender we can recommend to you. 

References

203(k) Rehab Mortgage Insurance. (n.d.). Retrieved November 01, 2016, from http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k/203k--df 
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USDA Reduces Fees

USDA Reduces Fees

Excellent news! USDA recently made a major reduction in fees charged to borrowers. In this article, we will discuss which fees have been reduced and how you can use our mortgage calculator for USDA loans. First, let's discuss the basics regarding USDA loans: 

What is a USDA loan?

USDA stands for United States Department of Agriculture. The USDA’s Rural Development (RD) loans are for homes in rural areas.  These are commonly referred to as RHS loans or Rural Housing Service loans.  Most of our clients use the guaranteed program as opposed to RHS direct. There are some requirements to obtain an RD loan, including the particular rural area the home is in. Not all rural areas qualify for a USDA loan. USDA will make the determination regarding which areas will qualify. In Kentucky, Jefferson County is not eligible for USDA loans. However, USDA loans are eligible in areas such as Bullitt County, Oldham County, Spencer County, Nelson County, and much more.

Although USDA loans are eligible in these areas, USDA will make the final determination where or not a home qualifies for a USDA loan. Also, there are some household income requirements in order to obtain an RHS loan.

Some of the questions asked by USDA regarding income eligibility are the number of people in the household, the number of residents under 18 years old, the number of disabled residents or full-time students, and loan applicants or co-applicants age 62 or older. USDA also requires that homebuyers occupy the home as their primary residence. For more information, visit the USDA eligibility section on the website. You can type in the address of the home that you have an interest in to see if is eligible.  

USDA Makes Major Reductions to Fees

USDA/RHS loans offer 100 percent financing, which means as a buyer you aren’t required to put down any money when you purchase the home. This is uncommon amongst loan programs unless you are a veteran and obtain a VA loan. If 100 percent financing wasn’t enough, USDA has also reduced some of their fees!

Currently, USDA mortgages charge the following fees: an upfront guarantee fee and an annual fee. Starting October 1, 2016, these fees will be reduced. As of right now, the current upfront fee is 2.75% and the current annual fee is 0.50%. The new upfront fee will be 1.00% and new annual fee 0.35%. The reduction of fees will last up until September 30, 2017. Another reduction is possible in 2017. Usually, USDA will examine financial information and make a decision whether or not more reductions should be made or raise fees again. USDA announced that the reason behind this reduction in fees is due the performance of current borrowers (Lane,2016).

Mortgage Calculator for USDA Loans

Our mortgage calculator is a great tool to use to determine mortgage payments on a house. If you would like to use our mortgage calculator to determine your monthly mortgage payment for a USDA loan, follow the instructions on the mortgage calculator page. Also, add the additional information below:

-Enter Down Payment : 0

- Enter Annual PMI: 0.35%

Do you have any questions or comments regarding USDA's fee reduction? Please leave your questions and comments below. If you would like to speak to a lender about obtaining a USDA loan, contact the Hollinden Team. We have preferred lenders that we can recommend to you.

References:

Eligibility. (n.d.). Retrieved September 19, 2016, from http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do 
Lane, B. (2016, August 26). USDA slashing mortgage fees. Retrieved September 19, 2016, from http://www.housingwire.com/articles/37882-usda-slashing-mortgage-fees 
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Applying for a Home Loan in Louisville

Applying for a Mortgage Loan in Louisville

You’ve just been preapproved for a loan. You begin your search for your new home and find your dream home right away. Your REALTOR writes a contract and it is accepted by the seller. This is such an exciting time in your life! Purchasing a home is one of the most monumental events you will ever experience.  However, there are many things you should keep in mind when purchasing a home, especially when it comes to your home loan. In order to receive a mortgage loan and move into your new home, you will need to follow a few guidelines.

Here a few things you should NOT do when applying for a mortgage:

1.)    Do Not Take Out a New Loan- Taking out a new loan will increase your debt-to-income ratio (DTI). Lenders don’t like to see this when you are in the process of receiving a mortgage loan.

2.)    Do Not Make Late Payments- It could really jeopardize your chances of getting a loan if you pay bills late while in the process of receiving a mortgage loan. According to Credit.com, a 30-day late payment can drop your credit score by 60 to 110 points. If the 30-day late payment is a mortgage payment, you may be at risk of being rejected by the lender. 

3.)    Do Not Switch Jobs- Lenders want to see that you can hold down a job and have a steady income. Sometimes if you switch jobs within the same field of work, and you are not taking a pay cut, you may still be able to get a loan. You will also want to avoid taking any jobs that are commission based during the time you are applying for a mortgage loan.

4.)    Do Not Purchase Big Ticket Items- This would include things such as cars or furniture. Big ticket item purchases will increase your debt-to-income ratio which makes you at higher risk for being ineligible for obtaining a loan. In addition, this could lower your credit score. In general, you do not want to put too much money on your credit card before purchasing a home. If you cannot avoid purchasing a big ticket item, consult with your loan officer before doing so. If you need a loan officer in Louisville, we would be happy to help you.

5.)    Do Not Open or Close Credit Cards- If you open a new line of credit it is creating an inquiry on your credit report. This could result in lowering your credit score.

6.) Do Not Co-Signing a Loan- This can be very risky, especially when you are applying for a mortgage loan. To be on the safe side, avoid co-signing a loan altogether when you are applying for a mortgage loan.

Make sure to always consult with your loan officer if you have any questions or concerns. If you don’t have a loan officer and want to purchase a home, contact the Hollinden Team at 502-429-3866. We would love to help you get in touch with a loan officer in Louisville. We have several loan officers in Louisville that we can have contact you. If you are interested in mortgage rates in Louisville or the Louisville mortgage market, we can help with that as well. We also have information about the mortgage preapproval process in Louisville on our website. If you are interested in finding a home for sale in Louisville or surrounding counties, we would also love to help you with that as well.

References

 Birk, C. (2014, January 27). The Worst Things You Can Do Before Buying a Home | Credit.com. Retrieved June 22, 2016, from http://blog.credit.com/2014/01/the-worst-things-you-can-do-before-buying-a-home-74570/ 

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Changes in the FHA Mortgage Market

There have been several changes in the FHA backed mortgage market in the last year and the newest will occur on April 1. We will see upfront Mortgage Insurance increase from the current 1.0% to 1.75% that will help strengthen the capital reserves of FHA.  On top of this, the annual renewal premium will be as high as 1.25%. This will significantly increase a borrower’s cost.

This is important because a good many of our home buyers in Louisville utilize an FHA backed loan. As I look over my clients in the past, our first time home-buyers are often using FHA mortgages due to the low down payment required.

One complaint that I hear is that MI (Mortgage Insurance) is required with an FHA loan.  I think that it is hard to complain about paying mortgage insurance when you are able to buy a new home with a lot less than 20% down payment.  With this being said; the increase in Mortgage Insurance on a yearly basis and upfront will make a difference in the monthly payment of our Louisville real estate clients.

FHA loans will also work with some condominium purchases.  The key here is for the condo development to be FHA approved.  If I am showing homes to an FHA buyer, I always make sure that the condo is approved first.  I don’t want to waste our time showing something that won’t work.  Your FHA loan officer will be able to tell you if the condo development is approved or not.

Feel free to contact Tim Hollinden with The Hollinden Team if you have any questions about this or the Louisville KY Real Estate Market.

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Kentucky Housing Corporation

Real Estate agents think that this is a great time to buy with historically low home mortgage rates.  Mortgage loan officers would tell you the same thing.  However, some people have trouble qualifying for a loan and agents are always looking for alternatives.

KY Housing Corporation (KHC) is the state finance agency with very attractive rates.  They are currently quoting rates well under 4% on a 30-year fixed rate loan.  Rates such as these make it much cheaper to own a home or condo then rent an apartment.

Kentucky Spirit

They also have programs for down payment and closing cost assistance.  There is usually a small premium to use their down payment assistance.  KHC works with FHA, VA and RHS loans.  They are not known as a sub-prime lender as they do insist on a good credit score and assurance that the borrower will pay back the loan.

KHC is able to use the New Issue Bond Program (NIBP) to get these great rates.  The U.S. Department of Treasury provides these funds through a federal bond purchase program.

It is important to jump on these programs early.  In the past, there has been a finite amount of money to loan on some of Kentucky Housing Corps special programs.  As always, the early bird gets the worm.

Not all mortgage companies work with KHC, so it is best to check around and find a lender that knows how to use the Kentucky Housing program.

The Hollinden Team would advise you visit with a lender and see if you qualify for one of KHC’s loan programs.  Feel free to give us a call and we will try to point you in the right direction.  As always, The Hollinden Team is here to help you find your next home in Louisville, KY and the surrounding counties.

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Jefferson County Commissioner’s Sale on Liberty Street

I had not been to the Jefferson County Commissioner’s sale in a while and had the opportunity to attend with a friend yesterday. Since Louisville and Jefferson County has merged, this is basically the Louisville Kentucky foreclosure sale.  My friend had interest in a neighbor’s property and wanted some real estate expertise as he went to make his purchase.  I also went to see if much has changed; it hasn’t.

 The December 6th sale had 142 properties on the agenda.  32 of these, or 22%, were withdrawn before the sale.  Either restitution had been made, or the lender had some promise of a short sale occurring and postponed the foreclosure auction.

There were 7 properties that actually changed hands.  This is only 5% but is on track with all of the other sales that I have attended.

Most of the sales were 2/3 of the Jefferson County Commissioner’s appraisal to avoid the right of redemption act.  There were a couple of sales below this number which gives the original owner a chance to repurchase their property.

Of note was a property the commissioner appraised at $17,000.  The bidding was fast and furious with the bidding ending at $43,000.  The weird part; the bank was the final bidder.  Jewell

There was another house that the commissioner appraised at $100,000.  The Jefferson County PVA has it valued at $112,900.  The bank made an initial bid of $160,125 and this was the only bid.  Obviously, there is something that I don’t know.

Back to my friend and his attempt to purchase a foreclosed home.  The bidding started at 2/3 and he was the only bidder against the bank.  There comes a point when the price becomes uncomfortable.   The buyer has to factor in the fact that he has not been in the property and has no control until he has paid for it in full.  In short, we walked away empty handed.

It is more of a sure thing to buy a bank-owned foreclosure once it is on the MLS.  You have the ability to at least see the interior of the home and will more than likely do a home inspection.

 If you want more information about the short sale process, foreclosures and short sales in the Louisville KY area, feel free to contact the Real Estate Experts at The Hollinden Team.

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FHA 203K Renovation Loan Success story in Louisville KY

Renovation loans can be a challenge in the Louisville KY market as well as many others.  We see lots of bank owned homes that need more than a little TLC to get them back in shape.  These would include Fannie Mae, Freddie Mac, local banks as well as the big boys, and HUD homes.

We recently bought a Fannie Mae Foreclosure that needed a lot of “Tender Loving Care”.  Our issues were termite damage, dilapidated carpet, single pane windows, shingles at the end of their life, gutters, siding with holes, outdated kitchen, etc.  Did I mention that it needed paint?  We knew that the price was right, but we required funds for repairs as well as the regular mortgage. 

We initially tried to get a HomePath “Renovation” loan as that seemed like a great deal.   Our first obstacle was finding a loan officer that could take care of us.  In Kentucky, HomePath loans are fairly popular, but we do not have anyone writing HomePath Renovation loans within the state.  To get a HomePath Renovation loan required us going to an out of state lender.  We found a good loan officer in Ohio and were quickly pre-approved.  As we progressed, we found that our down payment would now be 5% putting a squeeze on our cash flow.

FHA has always had their regular 203b loans.  They now offer a program called the 203k Renovation loan.  Within this program, they have the “Streamlined” version as well as the “Standard”.  The FHA Streamlined Renovation version is for expenditures of up to $35,000 and works for most people.  This enabled us to roll the repairs into the cost of the initial mortgage.  The list of what you can receive funding is quite large.  You can’t do major remodeling such as removing a load-bearing wall.  The FHA Standard Renovation loan is a different animal and something for another blog.

Before we made our offer, we contacted a general contractor of our choosing and had him give us an estimate.  We then felt comfortable making an offer and Fannie Mae accepted.  There was some paperwork involved, but we were able to close within 45 days.  Our contractor needed to show proof that he was licensed and insured and that was no big deal. 

As part of the appraisal process, we needed an “as-is” appraisal and a “finished” appraisal before we could get our loan.  The appraiser had our work estimate in hand so he knew what we were looking to accomplish.  The finished appraisal was estimated to be $15,000 more than we would have in the house.

On the day of closing, our contractor was able to receive 50% up front to cover his initial outlay for materials.  We are off to the races!!  A couple of weeks have passed and great progress is being made.  Our family moves to a newly painted and modernized home in a great neighborhood.

I like a story with a good ending.

For more details, feel free to contact The Hollinden Team in Louisville KY about this FHA Renovation process.

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Are Credit Counselors a good thing?

I worked with a client last week that was interested in one of our home listings.  They informed me that they had some credit issues in the past, but were working through those, and both had good steady jobs.  I suggested a couple of loan officers that could get them approved for a home loan and to let me know the amount of the pre-approval.

A few days later, my client calls me and reports that he was turned down for the home loan approval.  I was expecting to hear that his credit score killed them and he tells me that it is 650.  Not being a Louisville loan officer, I am thinking that this is not too bad and there is more to the story, and there was!  A few months back, they had hired a “credit counselor”.  They would give the counselor XX dollars a month and the counselor would pay their bills in the way that would best bring up their credit score.

Now here is the rub, the Louisville, KY mortgage officer looked at the fact that they had hired a credit counselor in a negative light.  The reasoning is that the couple must not be responsible if they have to hire someone to pay their bills.  To say my client was unhappy, was an understatement.

Here is the amazing thing, this couple had cash in the bank and thought that they were doing the best that they could to raise their credit score.  Their plan was to pay off the “credit counselor” that day and take over their day to day affairs.  Hopefully in 2 or 3 months, they can buy a house in Old Louisville.

If you have any questions about your mortgage payments, check out our mortgage calculator at The Hollinden Team in Louisville, KY.

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