Credit Score Requirements for a Kentucky Mortgage Home Loan Approval

# Credit Score Requirements for a Kentucky Mortgage Loan in 2025 – And How to Improve Yours Fast **Meta Title:** Credit Score Requirements for a Kentucky Mortgage Loan | Joel Lobb **Meta Description:** Find out the minimum credit scores needed for FHA, VA, USDA, KHC, and Fannie Mae loans in Kentucky in 2025 — plus proven tips to boost your score before you buy. **URL Slug:** credit-score-requirements-kentucky-mortgage-loan **Primary Keyword:** credit score requirements Kentucky mortgage **Secondary Keywords:** how to improve credit score Kentucky home buyer, Kentucky FHA credit score, KHC credit score requirements, minimum credit score Kentucky mortgage, first time home buyer credit score Kentucky --- If you're planning to buy a home in Kentucky and wondering whether your credit score is good enough — you're asking exactly the right question. Your credit score is one of the most important factors in getting approved for a mortgage, and it also directly affects your interest rate and monthly payment. The good news? You don't need perfect credit to buy a home in Kentucky. Whether you're a first-time homebuyer in Louisville, Lexington, Bowling Green, or anywhere in the Bluegrass State, there are loan programs available with flexible credit requirements — including options with zero down payment. In this guide, Kentucky Mortgage Loan Officer **Joel Lobb** (NMLS #57916) breaks down exactly what credit scores you need for each major loan program in Kentucky, explains what goes into your FICO score, and gives you step-by-step tips to raise your score quickly so you can get approved and into a home sooner. --- ## Minimum Credit Score Requirements by Loan Type in Kentucky (2025) Before you start house hunting, you need to know your number. Here's what lenders typically look for on each major Kentucky mortgage program: ### FHA Loans – Kentucky's Most Popular First-Time Buyer Option The **Federal Housing Administration (FHA) loan** is the go-to program for Kentucky first-time homebuyers with less-than-perfect credit. Here's how the credit score tiers work: - **580+ credit score** → Eligible for the minimum **3.5% down payment** - **500–579 credit score** → May still qualify, but requires a **10% down payment** - **Below 500** → Not eligible for FHA financing FHA loans are especially popular in Kentucky because they allow gift funds for the down payment, accept higher debt-to-income ratios, and are available statewide — in both cities and rural areas. ### VA Loans – Zero Down for Kentucky Veterans If you are a veteran, active-duty military, or surviving spouse, a **VA loan** offers the best terms available — including no down payment and no monthly mortgage insurance. The VA does not set a minimum credit score, but most Kentucky lenders require at least a **580–620 FICO score**. Some lenders may work with scores as low as **500** with strong compensating factors such as low debt ratios or significant residual income. ### USDA / Rural Development Loans – Zero Down in Eligible Kentucky Areas The **USDA Rural Development loan** is one of the best-kept secrets in Kentucky mortgage lending. It requires **zero down payment** and is available to low-to-moderate income buyers in USDA-eligible areas — which covers a large portion of Kentucky, including many suburban communities outside Louisville and Lexington. USDA loans typically require a **640+ credit score** for automated underwriting approval. Scores below 640 may require manual underwriting with additional documentation. ### KHC Loans – Kentucky Housing Corporation Down Payment Assistance **Kentucky Housing Corporation (KHC)** loans are specifically designed for Kentucky first-time homebuyers and offer below-market interest rates plus down payment assistance programs. - **Minimum credit score: 620** for most KHC programs - KHC down payment assistance is available as a loan or grant — currently up to several thousand dollars — to help with your down payment and closing costs - KHC programs can be paired with FHA, VA, USDA, or Conventional financing ### Conventional / Fannie Mae Loans Conventional loans backed by **Fannie Mae** offer excellent terms for buyers with stronger credit: - **Minimum credit score: 620** for Conventional loan approval - **Score of 740+** typically qualifies you for the best interest rates available - Fannie Mae's **HomeReady** program allows as little as **3% down** for income-eligible buyers --- ## Quick Reference: Kentucky Mortgage Credit Score Chart | Loan Program | Minimum Credit Score | Down Payment | |---|---|---| | FHA | 580 (500 with 10% down) | 3.5% | | VA | 580–620 (varies by lender) | 0% | | USDA Rural Development | 640 | 0% | | KHC (Kentucky Housing) | 620 | Down Payment Assistance Available | | Fannie Mae Conventional | 620 | 3–5% | | Fannie Mae HomeReady | 620 | 3% | --- ## Why Your Credit Score Matters Beyond Just Getting Approved Your credit score doesn't just determine whether you get approved — it determines the **interest rate you pay for the life of your loan**. Even a 20-point difference in your score can mean hundreds of dollars per year in interest. For example, on a $200,000 Kentucky mortgage: - A borrower with a **760 score** might qualify for a rate of 6.5%, resulting in a payment of approximately **$1,264/month** - A borrower with a **640 score** might be offered 7.5%, putting the payment at approximately **$1,398/month** That's over **$1,600 per year** in extra interest — or more than **$48,000 over the life of a 30-year loan** — simply due to a 120-point difference in credit scores. **This is why taking even 60–90 days to improve your score before applying can be one of the most financially impactful decisions you make.** --- ## What Makes Up Your FICO Credit Score? Understanding the five components of your FICO score is the first step to improving it. Here's how each factor is weighted: 1. **Payment History (35%)** — The most important factor. Do you pay your bills on time? Even one 30-day late payment can drop your score significantly. 2. **Amounts Owed / Credit Utilization (30%)** — How much of your available credit are you using? Keeping balances below 30% of your credit limit (and ideally below 10%) has a major positive impact. 3. **Length of Credit History (15%)** — How long have your accounts been open? Older accounts with good history help your score. Avoid closing old credit cards before applying for a mortgage. 4. **Credit Mix (10%)** — Having a mix of account types (credit cards, auto loans, student loans) shows lenders you can manage different types of debt responsibly. 5. **New Credit / Hard Inquiries (10%)** — Applying for multiple new credit accounts in a short period can temporarily lower your score. Avoid opening new credit cards or financing furniture in the months before applying for a mortgage. --- ## 10 Proven Ways to Improve Your Credit Score Before Buying a Kentucky Home If your score isn't quite where it needs to be, don't get discouraged. Many Kentucky homebuyers have raised their scores by 20 to 100+ points in just 3 to 6 months by following these steps: ### 1. Pull Your Free Credit Reports and Dispute Any Errors Get your free reports from all three bureaus — **Equifax, Experian, and TransUnion** — at [AnnualCreditReport.com](https://www.annualcreditreport.com). Look for: - Accounts that don't belong to you - Late payments reported incorrectly - Duplicate collection accounts - Accounts listed as open that you've paid off Disputing and removing errors is one of the fastest ways to raise your score, sometimes resulting in a 20–50 point increase. ### 2. Pay Down Credit Card Balances Your **credit utilization ratio** — how much of your available credit you're using — accounts for 30% of your score. If you have a credit card with a $5,000 limit and a $4,000 balance, your utilization is 80%, which severely hurts your score. Goal: Get each card's utilization **below 30%**, ideally below 10%. ### 3. Never Miss a Payment — Set Up Autopay Since payment history is 35% of your score, a single missed payment can cost you 50–100 points. Set up autopay for at least the minimum payment on all accounts so you never accidentally miss a due date. ### 4. Don't Close Old Credit Card Accounts It might seem smart to close cards you don't use, but doing so shortens your credit history and increases your utilization ratio. Both hurt your score. Keep old accounts open — just put a small recurring charge on them to keep them active. ### 5. Become an Authorized User on Someone Else's Account If a family member or trusted friend has a credit card with a long history and low utilization, ask them to add you as an **authorized user**. Their positive history can appear on your credit report and boost your score — even if you never use the card. ### 6. Address Collection Accounts Strategically Having a collection account on your report doesn't always mean you need to pay it off to qualify for a mortgage — it depends on the loan type. However, **medical collections are now treated differently** by most mortgage underwriting systems and may have less impact on your qualifying score. Talk to your loan officer before paying off collections, as it can sometimes temporarily lower your score. ### 7. Avoid Applying for New Credit Before Your Mortgage Every time you apply for a credit card, car loan, or store financing, the lender does a **hard inquiry** on your credit, which can drop your score by 5–10 points temporarily. Avoid new credit applications for at least 6 months before applying for a mortgage. ### 8. Use a Secured Credit Card to Build Credit If you have limited credit history or are rebuilding after problems, a **secured credit card** (where you deposit money as collateral) can be a powerful tool. Use it for small purchases and pay it off in full each month. After 6–12 months of on-time payments, you'll see your score climb. ### 9. Keep Accounts Open During the Mortgage Process Once you've been pre-approved and are under contract on a home, do not open or close any accounts. Your lender will pull your credit again before closing, and changes to your profile can delay or derail your approval. ### 10. Ask for a Rapid Rescore Through Your Lender If you've paid down a balance or had an error removed, ask your Kentucky mortgage loan officer about a **Rapid Rescore**. This is a service that can update your credit report and recalculate your score within 3–5 business days — much faster than waiting for the bureaus to update naturally. This can be a game-changer if you're close to a qualifying score threshold. --- ## Kentucky-Specific Credit Tips: What I've Seen Working With 1,300+ Kentucky Families After helping more than 1,300 Kentucky families buy or refinance their homes over 20+ years, here's what I've found works best for buyers in our state: **Take advantage of KHC down payment assistance.** Kentucky Housing Corporation programs help buyers who are close to qualifying get across the finish line. If your score is at or above 620, we may be able to pair a KHC down payment grant with an FHA or Conventional loan and get you into a home with very little out of pocket. **Don't assume you need to wait.** Many buyers come to me thinking they need a year or more to fix their credit. In many cases, two to three targeted moves — disputing an error, paying down one card, and removing an old collection — can get a buyer from a 580 to a 620 in 60 days. **Get pre-qualified before you're "ready."** I offer free same-day pre-qualifications. Even if your score isn't where it needs to be yet, I can create a personalized credit improvement roadmap specifically for your situation. No cost, no pressure, no obligation. --- ## Frequently Asked Questions: Credit Scores and Kentucky Mortgage Loans **What is the minimum credit score to buy a house in Kentucky?** It depends on the loan program. FHA loans allow scores as low as 500 (with 10% down) or 580 (with 3.5% down). VA and USDA loans require 580–640 depending on the lender. KHC and Conventional loans typically require a 620 minimum. **Can I get a Kentucky mortgage with a 580 credit score?** Yes. A 580 FICO score qualifies you for an FHA loan with 3.5% down. You may also qualify for a VA loan (if eligible) with a 580 score through certain lenders. KHC and USDA loans typically require a 620 minimum. **How long does it take to improve a credit score?** Small improvements — like paying down a credit card balance or having an error removed — can show results in 30 to 60 days. More significant rebuilding after bankruptcy or foreclosure can take 1 to 3 years. **Does checking my own credit score hurt it?** No. When you check your own credit (a "soft inquiry"), it does not affect your score. Only "hard inquiries" from lenders when you apply for credit can temporarily lower your score. **What credit score do I need for a USDA loan in Kentucky?** Most USDA lenders in Kentucky require a **640 credit score** for automated underwriting approval. Scores between 580 and 639 may be considered through manual underwriting with compensating factors. **What credit score do I need for a KHC down payment assistance loan?** KHC requires a minimum **620 credit score** for most of its loan programs and down payment assistance options. --- ## Ready to Find Out Where You Stand? Get a Free Same-Day Pre-Qualification You don't have to figure this out alone. Whether your credit is strong, a work in progress, or you're not sure where you stand — I'm here to help. I've worked with Kentucky buyers across the credit spectrum and can tell you exactly what you qualify for today and what steps will get you to your goal faster. **Joel Lobb — Kentucky Mortgage Loan Officer** 📞 **Call or Text:** [502-905-3708](tel:5029053708) 📧 **Email:** [kentuckyloan@gmail.com](mailto:kentuckyloan@gmail.com) 🌐 **Apply Online:** [www.mylouisvillekentuckymortgage.com](https://www.mylouisvillekentuckymortgage.com) NMLS #57916 | Company NMLS #1738461 *Licensed in Kentucky Only | Equal Housing Lender* *This website is not affiliated with or endorsed by FHA, VA, USDA, KHC, or any government agency. All loan approvals are subject to underwriting guidelines. Not all borrowers will qualify.* --- *Tags: credit score Kentucky mortgage, FHA credit score Kentucky, KHC credit score requirements, improve credit score Kentucky home buyer, Kentucky first time home buyer credit score, minimum credit score Kentucky mortgage loan, USDA credit score Kentucky, VA loan credit score Kentucky, Louisville KY mortgage credit requirements*

Kentucky Mortgage: Lock Kentucky Mortgage Loan Rate

Guidelines for Locking In A Kentucky Mortgage Rate

All About Lock-Ins

In most cases, the terms you are quoted when you shop among lenders only represent the terms available to borrowers settling their loan agreement at the time of the quote. The quoted terms may not be the terms available to you at settlement weeks or even months later. Therefore, you should not rely on the terms quoted to you when shopping for a loan unless a lender is willing to offer a lock-in.

What Is a Lock-In?

A lock-in, also called a rate-lock or rate commitment, is a lender’s promise to hold a certain interest rate and a certain number of points for you, usually for a specified period of time, while your loan appli­cation is processed. (Points are additional charges imposed by the lender that are usually prepaid by the consumer at settlement but can sometimes be financed by adding them to the mortgage amount. One point equals one percent of the loan amount.) Depending upon the lender, you may be able to lock in the interest rate and number of points that you will be charged when you file your application, during processing of the loan, when the loan is approved, or later.

A lock-in that is given when you apply for a loan may be useful because it’s likely to take your lender several weeks or longer to prepare, document, and evaluate your loan application. During that time, the cost of mortgages may change. But if your interest rate and points are locked in, you should be protected against increases while your application is processed. This protection could affect whether you can afford the mortgage. However, a locked-in rate could also prevent you from taking advantage of price decreases, unless your lender is willing to lock in a lower rate that becomes available during this period.

It is important to recognize that a lock-in is not the same as a loan commitment, although some loan commitments may contain a lock-in. A loan commitment is the lender’s promise to make you a loan in a specific amount at some future time. Generally, you will receive the lender’s commitment only after your loan application has been approved. This commitment usually will state the loan terms that have been approved (including loan amount), how long the commitment is valid, and the lender’s conditions for making the loan such as receipt of a satisfactory title insurance policy protecting the lender.

Will Your Lock-In Be In Writing?

Some lenders have preprinted forms that set out the exact terms of the lock-in agreement. Others may only make an oral lock-in promise on the telephone or at the time of application. Oral agreements can be very difficult to prove in the event of a dispute.

Some lenders' lock-in forms may contain crucial information that is difficult to under­stand or that is in fine print. For example, some lock-in agreements may become void through some unrelated action such as a change in the maximum rate for Veterans Administration guaranteed loans. Thus, it is wise to obtain a blank copy of a lender’s lock-in form to read carefully before you apply for a loan. If possible, show the lock-in form to a lawyer or real estate professional.

It is wise to obtain written, rather than verbal, lock-in agreements to make sure that you fully understand how your lender’s lock-­ins and loan commitments work and to have a tangible record of your arrangements with the lender. This record may be useful in the event of a dispute.

Will You Be Charged for a Lock-In?

Lenders may charge you a fee for locking in the rate of interest and number of points for your mortgage. Some lenders may charge you a fee up-front, and may not refund it if you withdraw your application, if your credit is denied, or if you do not close the loan. Others might charge the fee at settlement. The fee might be a flat fee, a percentage of the mortgage amount, or a fraction of a per­centage point added to the rate you lock in. The amount of the fee and how it is charged will vary among lenders and may depend on the length of the lock-in period.

What Options Are Available for Set­ting the Mortgage Terms?

Lenders may offer different options in establishing the interest rate and points that you will be charged, such as:

Locked-In Interest Rate--Locked-In Points. Under this option, the lender lets you lock in both the interest rate and points quoted to you. This option may be considered to be a true lock-in because your mortgage terms should not increase above the interest rate and points that you’ve agreed upon even if market conditions change.

Locked-In Interest Rate--Floating Points. Under this option, the lender lets you lock in the interest rate, while permit­ting or requiring the points to rise and fall (float) with changes in market conditions. If market interest rates drop during the lock-in period, the points may also fall. If they rise, the points may increase. Even if you float your points, your lender may allow you to lock-in the points at some time before settlement at whatever level is then current. (For instance, say you’ve locked in a 10½ percent interest rate, but not the 3 points that went with that rate. A month later, the market interest rate remains the same, but the points the lender charges for that rate have dropped to 2½. With your lender’s agreement, you could then lock in the lower 2½ points.) If you float your points and market interest rates increase by the time of settlement, the lender may charge a greater number of points for a loan at the rate you’ve locked in. In this case, the benefit you might have had by locking in your rate may be lost because you’ll have to pay more in up-front costs.

Floating Interest Rate--Floating Points. Under this option, the lender lets you lock in the interest rate and the points at some time after application but before settlement. If you think that rates will remain level or even go down, you may want to wait on locking in a particular rate and points. If rates go up, you should expect to be charged the higher rate.

Because practices vary, you may want to ask your lender whether there are other options available to you.

How Long Are Lock-Ins Valid?

Usually the lender will promise to hold a certain interest rate and number of points for a given number of days, and to get these terms you must settle on the loan within that time period. Lock-ins of 30 to 60 days are com­mon. But some lenders may offer a lock-in for only a short period of time (for example, 7 days after your loan is approved) while some others might offer longer lock-ins (up to 120 days). Lenders that charge a lock-in fee may charge a higher fee for the longer lock-in period. Usually, the longer the period, the greater the fee.

The lock-in period should be long enough to allow for settlement, and any other contin­gencies imposed by the lender, before the lock-in expires. Before deciding on the length of the lock-in to ask for, you should find out the average time for processing loans in your area and ask your lender to estimate (in writ­ing, if possible) the time needed to process your loan. You’ll also want to take into account any factors that might delay your set­tlement. These may include delays that you can anticipate in providing materials about your financial condition and, in case you are purchasing a new house, unanticipated con­struction delays. Finally, ask for a lock-in with as few contingencies as possible.

What Happens If the Lock-in Period Expires?

If you don’t settle within the lock-­in period, you might lose the interest rate and the number of points you had locked in. This could happen if there are delays in processing whether they are caused by you, others involved in the settlement process, or the lender. For example, your loan approval could be delayed if the lender has to wait for any documents from you or from others such as employers, appraisers, termite inspectors, builders, and individuals selling the home. On occasion, lenders are themselves the cause of processing delays, particularly when loan demand is heavy. This sometimes happens when interest rates fall suddenly.

If your lock-in expires, most lenders will offer the loan based on the prevailing interest rate and points. If market conditions have caused interest rates to rise, most lenders will charge you more for your loan. One reason why some lenders may be unable to offer the lock-in rate after the period expires is that they can no longer sell the loan to investors at the lock-in rate. (When lenders lock in loan terms for borrowers, they often have an agreement with investors to buy these loans based on the lock-in terms. That agreement may expire around the same time that the lock-in expires and the lender may be unable to afford to offer the same terms if market rates have increased.) Lenders who intend to keep the loans they make may have more flexibility in those cases where settlement is not reached before the lock-in expires.

How Can You Speed Up the Approval of the Loan?

While the lender has the greatest role in how fast your loan application is processed, there are certain things you can do to speed up its approval. Try to find out what documentation the lender will require from you.

Much of the information required by your lender can be brought with you when you apply for a loan. This may help to get your application moving more quickly through the process. When you first meet with your lender, be sure to bring the following documents:

The purchase contract for the house (if you don’t have the contract, check with your real estate agent or the seller).

Your bank account numbers, the address of your bank branch and your latest bank statement, plus pay stubs, W-2 forms, or other proof of employment and salary, to help the lender check your finances.

If you are self-employed, balance sheets, tax returns for 2-3 previous years, and other information about your business.

Information about debts, including loan and credit card account numbers and the names and addresses of your creditors.

Evidence of your mortgage or rental payments, such as cancelled checks.

Certificate of Eligibility from the Veterans Administration if you want a VA-guaranteed loan. Your lender may be able to help you obtain this.

Be sure to respond promptly to your lender’s requests for information while your loan is being processed. It is also a good idea to call the lender and real estate agent from time to time. By calling occasionally, you can check on the status of your application, and offer to help contact others such as employers who may need to provide documents and other information for your loan. It is also helpful to keep notes on your contacts with the lender so that you will have a record of your conversations.

Ask About Lock-Ins

When you’re ready to settle on your loan, you’ll want to get the loan terms that you’ve locked in. To increase that likelihood, it is important to learn as much as you can about what the lender is promising you before you apply for a loan. Ask for the following infor­mation when you shop for a loan:

Lock-Ins and Fees

Does the lender offer a lock-in of the interest rate and points?

When will the lender let you lock in the interest rate and points? When you apply? When the loan is approved?

Will the lock-in be in writing? If the lock-in is not in writing, you will have no record of the lender’s agreement with you in case of a dispute.

Does the lender charge a fee to lock in your interest rate? Does the fee increase for longer lock-in periods? If so, how much?

If you have locked in a rate, and the lender’s rate drops, can you lock in at the lower rate? Does the lender charge you an additional fee to lock in the lower rate?

Can you float your interest rate and points for now, and lock them in later?

Loan Processing Time

How long does the lender expect to take to process your loan?

What has been the lender’s average time for processing loans recently?

Has the lender’s loan volume increased? Heavy volume might increase the lender’s average processing time.

Expiration of Lock-ins

What rate will be charged if the lock-in expires before settlement-the rate in effect when the lock-in expires?

If you don’t settle within the lock-in period, will the lender refund some or all of your application or lock-in fees if you decide to cancel the loan application?

If your lock-in expires and you want to get another lock-in at the rate in effect at the time of the expiration, will the lender charge an additional fee for the second lock-in?

Joel Lobb

Senior Loan Officer

(NMLS#57916

text or call my phone: (502) 905-3708

email me at kentuckyloan@gmail.com

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). USDA Mortgage loans only offered in Kentucky.

All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.

http://www.federalreserve.gov/pubs/lockins/default.htm

 

Email This

BlogThis!

Share to Twitter

Share to Facebook

Share to Pinterest

Home

Typical closing costs for a Kentucky Mortgage Loan

This is a detailed summary of costs you may have to pay when you buy or refinance your Louisville Kentucky Home Mortgage. 

They are listed in the order that they should appear on a Good Faith Estimate you obtain from a mortgage lender. There are two broad categories of closing costs. Non-recurring closing costs are items that are paid once and you never pay again. Recurring closing costs are items you pay time and again over the course of home ownership, such as property taxes and homeowner's insurance. Some of the items that appear here do not traditionally appear on a lender's Good Faith Estimate and lenders are not required to show all of these items.







Non-Recurring Closing Costs Associated with the Lender.

Loan Origination Fee - The loan origination fee is often referred to as "points." One point is equal to one percent of the mortgage loan. As a rule, if you are willing to pay more in points, you will get a lower interest rate. On a VA or FHA loan, the loan origination fee is one point. Anything in addition to one point is called "discount points."

Loan Discount - On a government loan, the loan origination fee is normally listed as one point or one percent of the loan. Any points in addition to the loan origination fee are called "discount points." On a conventional loan, discount points are usually lumped in with the loan origination fee.

Appraisal Fee - Since your property serves as collateral for the mortgage, lenders want to be reasonably certain of the value and they require an appraisal. The appraisal looks to determine if the price you are paying for the home is justified by recent sales of comparable properties. The appraisal fee varies, depending on the value of the home and the difficulty involved in justifying value. Unique and more expensive homes usually have a higher appraisal fee. Appraisal fees on VA loans are higher than on conventional loans.

Credit Report - As part of the underwriting review, your mortgage lender will want to review your credit history. The credit report can be as little as seven dollars, but normally runs between $21 and $60, depending upon the type of credit report required by your lender.

Lender's Inspection Fee - You normally find this on new construction and is associated with what is called a 442 inspection. Since the property is not finished when the initial appraisal is completed, the 442 inspection verifies that construction is complete with carpeting and flooring installed.

Mortgage Broker Fee - About seventy percent of loans are originated through mortgage brokers and they will sometimes list your points in this area instead of under Loan Origination Fee. They may also add in any broker processing fees in this area. The purpose is so that you clearly understand how much is being charged by the wholesale lender and how much is charged by the broker. Wholesale lenders offer lower costs/rates to mortgage brokers than you can obtain directly, so you are not paying "extra" by going through a mortgage broker.

Tax Service Fee - During the life of your loan you will be making property tax payments, either on your own or through your impound account with the lender. Since property tax liens can sometimes take precedence over a first mortgage, it is in your lender's interest to pay an independent service to monitor property tax payments. This fee usually runs between $70 and $80.

Flood Certification Fee - Your lender must determine whether or not your property is located in a federally designated flood zone. This is a fee usually charged by an independent service to make that determination.

Flood Monitoring - From time to time flood zones are re-mapped. Some lenders charge this fee to maintain monitoring on whether this re-mapping affects your property.

Other Lender Fees

We put these in a separate category because they vary so much from lender to lender and cannot be associated directly with a cost of the loan. These fees generate income for the lenders and are used to offset the fixed costs of loan origination. The Processing Fee above can also be considered to be in this category, but since it is listed higher on the Good Faith Estimate Form we did not also include it here. You will normally find some combination of these fees on your Good Faith Estimate and the total usually varies between $400 and $700.

Document Preparation - Before computers made it fairly easy for lenders to draw their own loan documents, they used to hire specialized document preparation firms for this function. This was the fee charged by those companies. Nowadays, lenders draw their own documents. This fee is charged on almost all loans and is usually in the neighborhood of $200.

Underwriting Fee - Once again, it is difficult to determine the exact cost of underwriting a loan since the underwriter is usually a paid staff member. This fee is usually in the neighborhood of $300 to $350.

Administration Fee - If an Administration Fee is charged, you will probably find there is no Underwriting Fee. This is not always the case.

Appraisal Review Fee - Even though you will probably not see this fee on your Good Faith Estimate, it is charged occasionally. Some lenders routinely review appraisals as a quality control procedure, especially on higher valued properties. The fee can vary from $75 to $150.

Warehousing Fee - This is rarely charged and begins to border on the ridiculous. However, some lenders have a warehouse line of credit and add this as a charge to the borrower.

Items Required to be Paid in Advance

Pre-paid Interest - Mortgage loans are usually due on the first of each month. Since loans can close on any day, a certain amount of interest must be paid at closing to get the interest paid up to the first. For example, if you close on the twentieth, you will pay ten days of pre-paid interest.

Homeowner's Insurance - This is the insurance you pay to cover possible damages to your home and other items. If you buy a home, you will normally pay the first year's insurance when you close the transaction. If you are buying a condominium, your Homeowners' Association Fees normally cover this insurance.

VA Funding Fee - On VA loans, the Veterans Administration charges a fee for guaranteeing your loan. If you have not used your VA eligibility in the past, this is two percent of the loan balance. If you have used your VA eligibility before, it is three percent of the loan. If you are refinancing from a VA loan to a VA loan, it is three-quarters of a percent of the loan amount. Instead of actually paying this as an out-of-pocket expense, most veterans choose to finance it, so it gets added to the loan balance. This is why the loan balance on VA loans can be higher than the actual purchase amount.

Up Front Mortgage Insurance Premium (UFMIP) - This is charged on FHA purchases of single family residences (SFR's) or Planned Unit Developments (PUDs) and is 2.25% of the loan balance. Like the VA Funding Fee it is normally added to the balance of the loan. Unlike a VA loan, the homebuyer must also pay a monthly mortgage insurance fee, too. This is why many lenders do not recommend FHA loans if the homebuyer can qualify for a conventional loan. However, condominium purchases do not require the UFMIP.

Mortgage Insurance - Though it is rare nowadays, some first-time homebuyer programs still require the first year mortgage insurance premium to be paid in advance. Most mortgage insurance (when required) is simply paid monthly along with your mortgage payment. Mortgage insurance covers the lender and covers a portion of the losses in those cases where borrowers default on their loans.




USDA Funding Fee- On USDA loans, the USDA charges a fee of 2% on purchases, and 1,5% on refinances for USDA home loans in Kentucky. This fee is put on top of whatever you finance or you can pay out of pocket instead of financing in over the loan term.





Reserves Deposited with Lender

If you make a minimum down payment, you may be required to deposit funds into an impound account. Funds in this account are your funds, and the lender uses them to make the payments on your Homeowner's insurance, property taxes, and mortgage insurance (whichever is applicable). Each month, in addition to your mortgage payment, you provide additional funds which are deposited into your impound account.

The lender's goal is to always have sufficient funds to pay your bills as they come due. Sometimes impound accounts are not required, but borrowers request one voluntarily. A few lenders even offer to reduce your loan origination fee if you obtain an impound account. However, if you are disciplined about paying your bills and an impound account is not required, you can probably earn a better rate of return by putting the funds into a savings account. Impound accounts are sometimes referred to as escrow accounts.

Homeowners Insurance Impounds - your lender will divide your annual premium by twelve to come up with an estimated monthly amount for you to pay into your impound account. Since a lender is allowed to keep two months of reserves in your account, you will have to deposit two months into the impound account to start it up.

Property Tax Impounds - How much you will have to deposit towards taxes to start up your impound account varies according to when you close your real estate transaction. For example, you may close in November and property taxes are due in December. Your deposit would be higher than for someone closing in May.

Mortgage Insurance Impounds - When required, most lenders allow this to simply be paid monthly. However, you may be required to put two months worth of mortgage insurance as an initial deposit into your impound account.

Non-Recurring Closing Costs not associated with the Lender

Closing/Escrow/Settlement Fee - Methods of closing a real estate transaction vary from state to state, as do the fees. For purchases, a general rule of thumb that usually works in calculating this closing cost is $200 plus $2 for every thousand dollars in price. For refinances there is usually a flat fee around $400 to $500.

Title Insurance - Title Insurance assures the homeowner that they have clear title to the property. The lender also requires it to insure that their new mortgage loan will be in first position. The costs vary depending on whether you are purchasing a home or refinancing a home, so we will not provide a range here.

Notary Fees - Most sets of loan documents have two or three forms that must be notarized. Usually your settlement or escrow agent will arrange for you to sign these forms at their office and charge a notary fee in the neighborhood of $40.

Recording Fees - Certain documents get recorded with your local county recorder. Fees vary regionally, but probably run between $40 and $75.

Pest Inspection - also referred to as a Termite Inspection. This inspection tests not only for pest infestations, but also other items such as wood rot and water damage. The inspection usually runs around $75. If repairs are required, the amount to cover those repairs can vary. The seller will usually pay for the most serious repairs, but this is a negotiable item. Usually (not always) the pest inspection fee is paid by the seller of the home and is not normally reflected on the Good Faith Estimate.

Home Inspection - Since it is the Homebuyer's choice to obtain a home inspection or not, this cost is not usually reflected on a Good Faith Estimate. However, it is recommended. Keep in mind that the home inspector has a certain set of standards he uses when inspecting a home, and those standards may be higher than required by local building codes. An example is that an inspector may note there is no spark arrestor on a chimney but the local building code may not require it. This sometimes leads to conflicts between buyer and seller.

Home Warranty - This is also an optional item and not normally included on the Good Faith Estimate. A Home Warranty usually covers such items as the major appliances, should they break down within a specific time. Often this is paid by the seller.

Refinancing Associated Costs (but not charged by the new Lender)

Interest - When you close the transaction on your refinance, there will most likely be some outstanding interest due on the old loan. For example, if you close on August twentieth (and you made your last payment), you will have twenty days interest due on the old loan and ten days prepaid interest on the new loan. Your first payment on the new loan would not be until October 1st since you have already paid all of August's interest when you closed the refinance transaction (since interest is paid in arrears, a September payment would have paid August's interest, which has already been paid in closing).

Reconveyance Fee - this fee is charged by your existing lender when they "reconvey" their collateral interest in your property back to you through recording of a Reconveyance. This fee can vary from $75 to $125.

Demand Fee - your existing lender may charge a fee for calculating payoff figures. If they do, this fee may run in the neighborhood of $60.

Sub-Escrow fee - though it sounds like an escrow fee, this fee is actually charged by the Title Company (and I've never been able to figure out exactly what it is for). Assume it is an income-generating fee similar to some of the lender fees mentioned above. Title representatives who want to explain this fee can send us an email.

Loan Tie-in Fee - though it sounds like a lender fee, this cost is actually charged by the Escrow Company (like the sub-escrow fee, I've never been able to understand this fee, either). Escrow officers who want to explain this fee can also send an email.

Homeowner's Association Transfer Fee - If you are buying a condominium or a home with a Homeowner's Association, the association often charges a fee to transfer all of their ownership documents to you.






Asking the Seller to Pay Closing Costs - Rules and Advice.



It has become common to ask the seller to pay some or all of the closing costs when you purchase a home. Essentially, this is financing your closing costs since you will probably pay a little bit more for the property than you would if you were paying your own costs.

Keep in mind a few simple rules. On Kentucky Fannie Mae or Conventional loans you can only ask the seller to pay non-recurring costs, not prepaids or items to be paid in advance. If you are putting ten percent down or more, the most the seller can contribute is six percent of the purchase price. If you are putting less down, the most the seller can contribute is three percent.

On Kentucky VA loans, you can ask the seller to pay everything. This is called a "VA No-No," meaning the buyer is making no down payment and paying no closing costs. The seller can pay up to 4% of your closing costs and prepaids not to exceed 4% of the sales price for a Kentucky VA Home Loan

On Louisville Kentucky FHA loans, the seller can pay almost any cost, but the buyer has to have a minimum three and 1/2 percent investment in the home/closing costs. On A Kentucky FHA loan, the seller may pay up to 6% of the sales price toward your closing costs and prepaids

Most refinances include the closing costs and prepaids in the new loan amount, requiring little or no out-of-pocket expenses to close the deal.

If you didn't get bored as you read through this, now you know everything...a lot, anyway...about closing costs.

If you're looking to buy a home or already own, you're probably familiar with the terms "Interest Rate" and "APR." They're both used when referring to mortgage rates, but why are both quoted and what makes them different?


Knowing the difference is very important and could save you thousands of dollars on your mortgage.

At the highest level:

The interest rate is the cost of borrowing the principal loan amount.

The APR — or Annual Percentage Rate — is a broader measure of borrowing and includes not only the interest rate but also any other costs to get a loan such as discount points, insurance and closing costs.

Given the same interest rate, higher APRs indicate more costs associated with obtaining a loan, including fees and points. Because of this, it's important to shop around and get APRs from several lenders, allowing you to compare all fees, apples–to–apples, and determine which lender is right for you.

If you're focused on getting the lowest monthly payment, the interest rate is likely the top priority for you. If your focus, however, is the total cost of the loan over time, the APR may be your most valuable tool.


While looking at interest rates and the APR are important, take some time to learn more about other important costs that factor in.


http://www.freddiemac.com/blog/homeownership/20180328_interest_rate_vs_apr.html




Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916



American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364



click here for directions to our office

Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com




https://www.mylouisvillekentuckymortgage.com/







CONFIDENTIALITY NOTICE: This message is covered by the Electronic Communications Privacy Act, Title 18, United States Code, §§ 2510-2521. This e-mail and any attached files are deemed privileged and confidential, and are intended solely for the use of the individual(s) or entity to whom this e-mail is addressed. If you are not one of the named recipient(s) or believe that you have received this message in error, please delete this e-mail and any attached files from all locations in your computer, server, network, etc., and notify the sender IMMEDIATELY at 502-327-9770. Any other use, re-creation, dissemination, forwarding, or copying of this e-mail and any attached files is strictly prohibited and may be unlawful. Receipt by anyone other than the named recipient(s) is not a waiver of any attorney-client, work product, or other applicable privilege. E-mail is an informal method of communication and is subject to possible data corruption, either accidentally or intentionally. Therefore, it is normally inappropriate to rely on legal advice contained in an e-mail without obtaining further confirmation of said advice.






--