The difference between a front-end and a back-end debt-to-income ratio for a Kentucky Mortgage LoanFHA, VA, KHC, USDA, Fannie Mae You should know what you can afford before beginning your search for a home. This enables you to focus on realistic choices and saves you time and effort. This section will show you how to calculate the amount you comfortably can spend for a home. What is the difference between a front-end and a back-end debt-to-income ratio? Before making a loan, the lender wants to be certain the borrower has the ability to repay. Before approving your mortgage loan application a lender will look at several factors to gauge the risk you pose as a borrower. There are two calculations your lender makes when determining your level of indebtedness.
Monthly debt obligations are the primary benchmark used to determine whether the borrower will be able to meet the expenses involved in home ownership. Housing expense is considered one of several components that make up the total debt-to-income ratio benchmark; there is not a separate housing-to-income benchmark unto itself.
Maximum Debt Ratios
Maximum ratios are 31%/43% for manually underwritten loans.
IMPACT OF PROGRAM SHUT-DOWNS
Rural Development’s mission is to serve as a catalyst for economic and community
development activities in rural areas through loans and grants to individuals, businesses,
and communities. The shut-down of RD loan and grant making activities for a prolonged
period of more than two weeks would have an immense adverse impact on the rural
economy. Should RD not be allowed to continue loan and grant making operations for an
extended period, the impact would be substantially more serious.
• No additional loans/grants would be available during the period except for emergency
purposes and to protect the Government’s interest. System generated disbursements
for previously obligated Rental Assistance (RA) funds will continue.
• No new RD rural housing loans or guarantees would be issued, which would result in
a setback in construction start-up, as well as a potentially costly inconvenience to
buyers and sellers depending on a Single Family Housing loan or guaranteed loan 09 18 2013 RD.doc
closing. A more permanent interruption in the program would cause a substantial
reduction in housing available in rural areas relative to population.
• New and expanding businesses would be unable to access loan guarantees to create
new jobs and save existing jobs and with them, the potential taxpayers who would
hold those jobs.
• No loans or assistance for essential community facilities would be made, delaying the
financing of health care, emergency response, and other essential services to rural
communities. Projects already financed that are under construction would be delayed
in having any bridge financing replaced with permanent financing from USDA. A
long-term shut-down would place RD seriously behind in our mission of improving
quality of life and economic opportunity in rural areas with limited income. The
current community facility loan program is one of the very few sources of financing
for essential community facilities in rural areas.
• Travel and training for RD operations would be suspended during the period of shutdown.
• After shut-down operations, RD state and area office employees located in
communities throughout the United States would be furloughed.
• No loans or advances would be made or issued for modernizing rural America’s
electric and telecommunications infrastructure. Borrowers would not be able to
improve service, meet Federal Communication Commission deadlines, or pay off
short-term bridge loans. No advances would be issued to pay invoices on
construction contracts, which could result in defaults on contracts and increase
construction costs. Ultimately, this could lead to RD loan security problems
Attitudes About Economy and Household Finances Remain Flat
WASHINGTON, March 7, 2013 /PRNewswire/ — Consumer attitudes toward the economy and housing continue to diverge this winter, according to Fannie Mae’sFebruary 2013 National Housing Survey results. On the one hand, consumers continue to express strong positive attitudes toward housing. On the other hand, sentiment about the economy and household finances is stalled. Average 12-month home price expectations and the share of consumers who believe home prices will go up over the next year both rose to record highs, and the percentage of Americans who say mortgage rates will rise reached its highest level sinceAugust 2011. At same time, Americans’ views on their personal financial situation, household income, and the direction of the economy fell or remained flat.
“Despite fiscal headwinds and political uncertainty, consumer sentiment toward housing is robust and continues to gather strength,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “We expect home prices to firm further amid a durable housing recovery, gradually reducing the population of underwater borrowers and helping to boost the share of consumers who say that now is a good time to sell.”
“Since reaching its trough last September, the share of consumers expecting mortgage rates to rise has trended up,” continued Duncan. “However, despite historically low mortgage rates, nearly half of borrowers have never refinanced their mortgage. Combined with the scheduled year-end HARP deadline, rising rate expectations should prompt some borrowers to refinance soon to take advantage of more favorable mortgage terms and add to their disposable income, helping to offset ongoing fiscal drag.”
Homeownership and Renting
The average 12-month home price change expectation increased 0.5 percent over last month to 2.9 percent, the highest level since the survey’s inception.
At 48 percent, the share who believe home prices will go up in the next 12 months also reached a survey high, while the share who believe home prices will go down held steady at the survey low of 10 percent.
The percentage who think mortgage rates will go up increased by 4 percentage points to 45 percent, the highest level since August 2011, while those who think they will go down held steady at 7 percent.
Twenty-five percent of respondents say it is a good time to sell a house, the highest level since the survey’s inception in June 2010.
At 3.9 percent, the average 12-month rental price change expectation increased 0.2 percent over January.
Fifty percent of those surveyed say home prices will go up in the next 12 months, holding steady from January at the highest level since the survey’s inception.
The share of respondents who said they would buy if they were going to move increased by 2 percentage points to 67 percent.
The Economy and Household Finances
At 38 percent, the share of respondents who say the economy is on the right track has held steady over the past three months.
The percentage who expect their personal financial situation to get better over the next 12 months fell by 2 percentage points to 41 percent.
Twenty-one percent of respondents say their household income is significantly higher than it was 12 months ago, a 2 percentage point decrease from last month.
Thirty-one percent report significantly higher household expenses compared to 12 months ago, a 7 percentage point decrease and the lowest level sinceJune 2010.
The most detailed consumer attitudinal survey of its kind, the Fannie Mae National Housing Survey polled 1,008 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts (findings are compared to the same survey conducted monthly beginning June 2010). Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future.
For detailed findings from the February 2013 survey, as well as a podcast providing an audio synopsis of the survey results and technical notes on survey methodology and questions asked of respondents associated with each monthly indicator, please visit the Fannie Mae Monthly National Housing Survey site. Also available on the site are quarterly survey results, which provide a detailed assessment of combined data results from three monthly studies. The February 2013 Fannie Mae National Housing Survey was conducted between February 2, 2013 and February 21, 2013. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.
Opinions, analyses, estimates, forecasts, and other views of Fannie Mae’s Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae’s business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.
Fannie Mae enables people to buy, refinance, or rent a home. We play a leading role in America’s economic recovery today and in building a better housing finance system for the future.
VA Loans require no down payment and allow you to qualify for a more expensive home. Plus, today mortgage rates on VA loans are very low, making homes even more affordable.
The VA doesn’t actually make loans. Instead, it insures loans so that if buyers default for some reason, the lenders will get their money. This encourages lenders to give mortgages to people who might not otherwise qualify for a loan.
Although there is no down payment required – There are still lender closing costs,but the seller usually pays ALL of the veteran’s closing costs (and with a $0 down payment, the veteran can literally purchase a home for nothing).
2 Years of period called to active duty, not less than 90 days.
Income Guidelines for VA Home Loans
When buying a home in Kentucky, the VA still requires a borrower to have sufficient and adequate income to cover the repayment of the mortgage. Before a borrower can be approved for a Kentucky VA home mortgage loan, the stability of income and the continuance of the borrower’s income must be established through acceptable sources of income, the borrower’s past employment record, and the employer’s confirmation of continued employment must be established.
Stability of a person’s income is generally derived from their employment history. VA requires verification for the previous two full years and must be documented through lender verifications of previous employment or W-2’s. This income must be analyzed to determine whether it can be expected to continue through the first 3 years of the mortgage loan (if the borrower intends to retire during this period, the expected retirement income, social security benefits, etc. should be used). Any gaps in employment must be reasonably explained by the borrower. Schooling or education for the borrower’s profession (e.g. nursing school) can be counted towards the 2 year requirement. Allowances for seasonal employment, such as is typical in the building trades for example, may be used.
VA FUNDING FEE
In order for VA to guarantee the home loan in Minnesota or Wisconsin, there is a closing cost assessed by the VA to originate the loan called a funding fee. This fee will vary, depending upon the type of VA loan, whether this is your first time to use your entitlement, if you are a disabled veteran, the down payment and if you served active duty or in the National Guard/Reserves.
The VA funding fee is required by law. The fee, is intended to enable the veteran who obtains a VA home loan to contribute toward the cost of this benefit, and thereby reduce the cost to taxpayers. The funding fee for second time users is a bit more expensive. The idea of a higher fee for second time use is based on the fact that these veterans have already had a chance to use the benefit once, and also that prior users have had time to accumulate equity or save money towards a down payment.
The following table breaks down the funding fee charged by VA:
First time use, purchase of an eligible property
0% to 4.99%
5% to 9.99%
Second time use, purchase of an eligible property
0% to 4.99%
5% to 9.99%
IRRL Streamline Refinance
VA STREAMLINE REFINANCE
An “Interest Rate Reduction Refinance Loan” (IRRRL) or Streamline Refinance allows Veterans to refinance their current mortgage interest rate to a lower rate than they are currently paying. This program is only available to veterans who are refinancing their original VA mortgage in which they utilized their original eligibility.
The VA charges ½ percent funding fee to guarantee the IRRRL Loan.
There is no cash out on an IRRRL loan.
The loan being refinanced must be current and have a perfect pay history for the last 12 months.
2nd mortgages cannot be included and must subordinate.
No assumptions are allowed.
This loan can be done with “no out of pocket money” by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.
VA Cash-Out Refinance
Cash-out refinances on properties owned more than one year prior to the refinance are permitted on owner occupied principal residences only, and are limited to 90% of the appraised value plus the allowable closing costs.
A cash-out refinance is when a borrower refinances their current mortgage for more than they owe in order to pull out the built up equity that has accrued in the home. The amount a home owner can borrower is limited by the value of the property compared to the loan amount (otherwise known as the loan-to-value or LTV).
The following are basic requirements of a cash-out VA refinance loan:
If the property was purchased less than one year preceding the refinance, the borrower is allowed to refinance up to 90% of the original sales price plus the allowable new closing costs or the appraised value plus the allowable closing costs (whichever is lesser)
If the property was purchased more than one year preceding the refinance, the borrower can cash-out 90% of the the appraised value plus the allowable closing costs
Applies to owner occupied properties only
2nd mortgages may be paid off with the cash-out refinance (the second mortgage must be at least 12 months old)
Loan amounts may not exceed 90% of the appraised value.
The borrower must have sufficient entitlement for the loan (not including any existing entitlement that was used for loans to be paid off by the refinance
There must be a first lien against the property
If the new loan is to refinance an existing mortgage to buy out an ex-spouse’s equity, a divorce decree or settlement agreement must be provided to document the equity awarded to the ex-spouse
All borrowers must credit qualify
A funding fee of 3.00% will be added to the loan amount at time of closing (there are no refunds for previous funding fees assessed by the VA).
is for any applicants that are purchasing an existing or newly constructed home in Jefferson County. You do not have to be a first time buyer to qualify.
Applicant(s) must be credit and income qualified. Gross income must be 80% or below of the area median income adjusted to family size, as determined by HUD.
applicant(s) must attend HUD approved homeownership classes in order to obtain the required certificate and to qualify for the down payment assistance. Contact one of the agencies listed below for counseling. Since each situation is unique you may talk to your loan specialist for details.
Applicant(s) must obtain first mortgage financing through a local lender.
Applicant(s) approved through Housing Choice Homeownership Program are also eligible.
applicant(s) must be a first time homebuyer and purchase an existing or newly constructed home in the Newburg targeted area.
The buyer(s) can either purchase a single-family unit or a single-family unit in a multifamily row house. Ownership must be in fee simple title or an ownership or membership in a condominium or cooperative unit.
The property purchased by the homebuyer must be occupied as their principal residence and cannot be mixed use, or business conducted there.
The property purchase price may not exceed the median area appraised value as published by HUD. (203b guidelines).
Prior to approval of the second mortgage, the property to be purchased will be inspected for code violations and a lead safe living environment. Louisville Metro Housing & Community Development shall be listed as the second loss payee on homeowners insurance. Taxes and insurance must be escrowed. Under no circumstances will funds from the mortgage result in cash back to the borrower(s), nor will the sum of all financing exceed 100% of the property cost plus any normal prepaid loan expenses.
TYPES OF ASSISTANCE
Newburg Revitalization Project
Assistance may be provided to a First-time homebuyer in the form of a Forgivable Mortgage for down payment and closing cost for the purchase of a newly constructed or existing home in the Newburg target area. The amount of Newburg Assistance received is based on income and may not exceed $20,000.00 for an existing home or $25,000.00 for new construction.
Home Ownership Assistance Program
Assistance may be provided in the form of a Forgivable Mortgage for down payment assistance for the purchase of an existing or a newly constructed home in the Louisville Metro area to a household at 70% or below of the median income. Assistance up to $5,000.00, plus an additional $4,000.00 could be available on a matching basis. Assistance may not exceed $9,000.00.
$4,000.00 on a matching basis may be provided in the form of a Forgivable Mortgage, to cover the down payment for those households at 71% to 80% of the median income. Assistance may not exceed $4,000.00.
Assistance up to $18,000.00 may be provided in the form of a Forgivable Mortgage for down payment assistance. This applies to households at or below 80% of the median income in purchasing newly constructed homes built on lots formerly known as City, Landbank Authority, or Urban Renewal