Monday, July 16, 2012

Kentucky USDA credit score and mortgage requirements for 2012

Credit Scores and the Kentucky USDA Rural Development Loan Program




The Kentucky USDA Rural Development Loan Program is by far the most credit score friendly loan program currently available. While USDA is willing to work with scores lower than 640 most lenders won't. Thus, pragmatically the minimum credit score required by USDA is 640.

For Kentucky homebuyers with a minimum credit score of 640 lenders may streamline the credit approval process normally required as part of the underwriting process. This means that a borrower:
With a lack of credit "depth" will not have to document non-traditional credit items such as utility or insurance payments
A negative past credit history may allow the Underwriter to not request letters of explanation for the cause of the past challenges
Collection accounts can remain open provided the Underwriter believes it unlikely that the account will eventually turn into a judgment
However, USDA is not willing to overlook certain overtly negative credit items even when the credit scores are over 640. For instance borrowers with any of the following adverse past credit should not expect to obtain credit approval using the USDA loan program:


Foreclosure or short sale within the last 3 years
Chapter 7 bankruptcy discharged within the past 3 years
Chapter 13 bankruptcy debt restricting plan completed within the last 12 months
Late mortgage payments within the last 12 months
Applicant or co-applicant delinquent on a federal debt; such as taxes, student loans, or previous agency loan (i.e. VA loan in which the eligibility was forfeited due to a foreclosure)

USDA may be willing to give a borrower an exception to a past bankruptcy or foreclosure prior to the three year period provided the borrower can document the cause of the past negative credit experience as being related to an illness or job loss and unlikely to reoccur.

Once the credit score exceeds 640, USDA allows this score to be considered as justification for allowing the borrowers debt-to-income-ratio to exceed the target ratios of 29% for the housing costs and 41% for the total debt ratio. Frequently USDA will approve loans where the housing ratios are in the high 30% range and total debt ratios are in the high 40% range.

Bottom line the Kentucky USDA Rural Development Loan Program is more flexible in approving a perspective borrower than any other loan program. But like any loan program today, the Loan Officer shouldn't assume that this level of credit flexibility will result in an automatic positive underwriting decision if the Underwriter doesn't feel strongly that the borrowers chance of success at homeownership is strong.


USDA RURAL DEVELOPMENT MORTGAGE OVERVIEW

Expanded qualifying ratios
Buyers with satisfactory credit may qualify with higher Debt-to-Income ratios to accommodate high cost housing areas, etc
Seller is allowed to pay Buyer's Closing Cost (ask USDA Specialist for details)
Reduces out of pocket costs for Buyers
Low minimum credit score (640 minimum credit score required)
Buyers with non-traditional or no credit histories may qualify
Very low monthly PMI
Low monthly mortgage insurance means a lower monthly payment for the Buyers and additional cash each month












Joel Lobb (NMLS#57916)Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.com

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*














Kentucky USDA credit score requirements

Wednesday, July 4, 2012

Louisville Ky Mortgage Lender FHA/VA KHC USDA Kentucky Mortgage: Mortgage Rates Louisville, Kentucky

Louisville Ky Mortgage Lender FHA/VA KHC USDA Kentucky Mortgage: Mortgage Rates Louisville, Kentucky:  Louisville Kentucky Mortgage Rates Today FHA, VA, KHC, USDA, Conventional Mortgage Rates Mortgage Rates Louisville, Kentucky Cu...

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