Saturday, April 21, 2018

How to Apply and Get Approved for A Kentucky VA Mortgage Loan?

If you or your spouse has ever served or is currently serving in the military, you may be eligible for a Kentucky VA loan. This type of VA mortgage loan is guaranteed by the U.S. Department of Veterans Affairs (VA), a federal agency that focuses on assisting military families and active duty soldiers in Kentucky buy a home going no money down with a low 30 year fixed rate loan. It's designed specifically to help Kentucky Mortgage veterans, as well as surviving spouses, purchase a home, posing several advantages to applicable borrowers.




Benefits of a Kentucky VA Loan

 

1. No Down Payment Needed...
Kentucky VA loans do not require a down payment, although having some money to put down is always helpful. This can save you thousands of dollars, and since it greatly reduces the upfront cost of purchasing a property, buying the home of your dreams is that much easier.
2. Neither is Private Mortgage Insurance
With various other home loans, you are obligated to pay private mortgage insurance (PMI) if you cannot afford a 20 percent down payment. This protects the mortgage lender in case you default on the loan. However, since the VA guarantees the loan, you won’t have to make monthly PMI premium payments despite not having a down payment.
Still, remember that you will probably be expected to pay a funding fee. As explained by the VA on its official website, “The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category, if you are a first-time or subsequent loan user, and whether you make a down payment.” It continues, “You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time.”
3. Minimal Closing Costs
Obtaining a VA loan limits the amount you'll have to pay in closing costs. In addition, the seller can offer to pay them for you, further saving you money.
Independent news sources Military Times breaks down the fees you cannot be charged at closing with a VA loan, referencing the VA’s Lenders HandbookThese include:
  • General attorney’s fees
  • Buyer-broker fees
  • Penalty costs
  • Appraisal fees - Specifically, those made “at the request of the lender or seller, nor can they be forced to pay for appraisals requested by other parties."
  • Inspection fees - Some inspection fees should not be included in the closing costs, “especially those involving re-inspections of dwellings built under Department of Housing and Urban Development supervision."
4. More Flexible Debt-to-Income Ratio Requirements and Credit Score Requirements
Your debt-to-income (DTI) ratio is a number that mortgage lenders look at to see how much of your monthly income actually goes to paying debts, such as credit card bills and car loans. Most lenders require a DTI ratio of 36 percent or lower. This ensures you have enough money left over each month to not only pay your mortgage, but to also pay utility bills, food purchases and other expenses. The VA loan program allows a DTI ratio of 41 percent, meaning you can get away with a little more debt and still qualify for the loan.
As discussed on the official blog of the VA, “The mortgage underwriters will make a thorough inspection of your loan application if your debt-to-income ratio is more than 41%."
"However, it does not mean that your VA loan application will be rejected straightway,” it states. You may still be eligible if your “DTI ratio is more than the permissible limit due to tax-free income” or if your “residual income surpasses the acceptable limit by around 20%.”
Credit scores are a critical competent for a VA mortgage loan approval along with your credit history. 

Here are Kentucky VA Mortgage Credit Requirements Currently:
  • VA does not have a mandatory minimum credit score requirement
  • VA lets the lender to set the minimum credit score requirement for loan approval 
  • Most lenders who are approved with the VA to originate and close on VA Loans have Lender Overlays on Credit Scores on VA Loans
  • Lender Overlays are the individual lender’s requirement which is above and beyond of those of the Department of Veteran Affairs
  • Most lenders will set lender overlays on credit scores at 580 or below and 620 and above most VA lender will work on VA loans credit score threshold
  • The higher the credit score, the greater chances of getting a VA loan approval if you have  a previous credit that is bad with collections, bankruptcy, lates and charge offs along with foreclosures.
  • VA does not have a maximum debt to income ratio requirement

Qualifying For VA Home Loans After Bankruptcy And Housing Event

  • 2 year waiting period to qualify for a VA mortgage loan after a Chapter 7 Bankruptcy
  • 2 year waiting period after housing event:
    • Date of prior short sale date
    • Recorded dates of foreclosure and/or deed in lieu of foreclosure
  • If you have deferred student loans that are deferred for at least 12 or more months, it will be exempt from from debt to income ratio calculations
Again, VA Loans are one of the most easiest mortgage loan programs to qualify for. However, not all can qualify for VA Loans. Only the men and women who have served in the United States Armed Services with a valid Certificate of Eligibility can qualify for this great loan program.

5. Eligibility is Still Possible After Bankruptcy
While most traditional mortgages will not be granted if you have filed for bankruptcy in the past, a VA loan allows it under certain circumstances. If you are making consistent payments to repay debt or if the bankruptcy was more than two years ago, it will likely not affect your chances of qualifying for a VA loan. However, every person’s financial situation is unique, so it’s strongly recommended that you contact a mortgage lender to find out if you have a chance of qualifying.
6. Financial Counseling is Available
If you have trouble making your mortgage payments, the VA may be able to negotiate with your lender. This could result in loan modifications or a repayment plan you can handle. Either way, you'll receive some help keeping your house.
The VA advises borrowers in such a situation to “let your mortgage company (servicer) know and try to work out a satisfactory plan to make up the payments missed.”
If you still find yourself in dire financial trouble, “the VA Regional Loan Centers have technicians available to conduct financial counseling. This counseling is designed to help you avoid foreclosure.”

In order to find out if you qualify for a Kentucky VA loan, you need to complete the Certificate of Eligibility (COE).

Going through this process may seem overwhelming at first, which is why working with a reputable mortgage lending company is so important. Rather than being left to fend for yourself, a lender will be able to answer any questions you have and provide all the information you need. This will make the entire home-buying experience less stressful for you and your family.



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How much house can you qualify for?


Traditionally, mortgage lenders have used something known as the 28/36 rule to determine how much of a mortgage you can qualify for. This refers to two income ratios that provide guidelines for your maximum monthly payment.
Front-end ratio-The "28" is known as the front-end ratio and says that your mortgage payment, including taxes and insurance, shouldn't exceed 28% of your pre-tax income.
Back-end ratio-The "36" is called the back-end ratio, which means your entire debt load, including your mortgage payment, car payment, credit cards, student loans, and other monthly payments shouldn't exceed 36% of your pre-tax income.
Some lenders will stretch these limits even further. For example, if your loan is a qualifying mortgage under Fannie Mae's underwriting standards, and you meet a few other requirements, you can qualify for a debt-to-income ratio of up to 45%. In other words, if your monthly paychecks are $5,000 before taxes, you could qualify for a mortgage as long as it doesn't cause your monthly debt load to exceed $2,250. No doubt this is on the high end of the spectrum for what you can afford with little cushion for unexpected events.







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