Establish a financial plan with a trusted local lender.
The start of the home ownership process is to have a solid financial plan. Once you have committed to buying a home, your real estate agent will connect you with a Louisville Loan Officer or Mortgage Provider. In conjunction with Thing 1, Thing 2 is the bases for realistic expectations.
Set a Budget and Prepare for an Offer
Knowing your buying power is crucial in the current Louisville Real Estate market. Your loan provider will work with you to identify the price range and loan product, which best suits your situation. They will also give you an estimate for your monthly payment. Just like your home search, there are many options to consider.
Common Louisville Real Estate Market Terms
Conventional Loan: A conventional loan is a mortgage that is not guaranteed or insured by any government agency and is typically fixed in its terms and rate. Conventional loans have the most leverage as they require significant down payments and credit score.
FHA Loan: An FHA loan is a mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low-to-moderate income borrowers who are unable to make a large down payment. Due to their federal requirements, there are obstacles with FHA, which can be easily overcome but you lose little leverage in negotiations.
USDA Loan: A USDA home loan is a zero-down payment mortgage for eligible rural and suburban homebuyers. USDA loans are issued through the USDA loan program, also known as the USDA Rural Development Guaranteed Housing Loan Program, by the United States Department of Agriculture.
VA Loan: The VA Loan is a mortgage loan issued by approved lenders and guaranteed by the U.S. Department of Veterans Affairs (VA). This type of loan is typically zero down with higher fees. VA loans have requirements set forth, making sellers obligated to meet.
Repair Credit: Credit repair is the process of fixing poor credit standing that may have deteriorated for a variety of different reasons. Repairing credit standing may be as simple as disputing mistaken information with the credit agencies. Identity theft, and the damage incurred, may require extensive credit repair work.
KHC: Kentucky Housing Corporation invests in affordable housing solutions by offering programs and services designed to develop, preserve, and sustain affordable housing throughout the state.
DAP: Down-Payment Assistance Program, available through KHC. KHC recognizes that down payments, closing costs, and prepaids are stumbling blocks for many potential home buyers. Here are several loan programs that can help. Your KHC-approved lender can help you apply for the program that meets your needs.
Hardest Hit Fund (HHF) DAP: Only available 1- 3 times a year for the Louisville real estate market. Zero percent interest rate for first-time home buyers. A non-repayable second mortgage for $10,000. Forgiven after five years. Home purchase must be located in Christian, Hardin, Jefferson, or Kenton counties. New construction properties are not allowed. Property has to have been previously occupied. Applicants must meet Secondary Market or MRB Income and Purchase Price Limits based on funding source.
Regular DAP: Purchase price up to $282,000 with Secondary Market or $253,800 with MRB. Assistance in the form of a loan up to $6,000 in $100 increments. Repayable over a ten-year term at 5.50 percent. A DAP of $6,000 over ten years at 5.50 percent interest would equal a payment of $65.12. Available to all KHC first-mortgage loan recipients.
Affordable DAP: Purchase price up to $282,000 with Secondary Market or $253,800 with MRB. Assistance up to $4,500. Repayable over a ten-year term at 1.00 percent. Borrowers must meet Affordable DAP income limits.
There are many other options available but these are the most common. If you are not currently ready to buy a home because of credit issues, many mortgage brokers have repair programs to outline what you need to do to be able to buy a home as well as the timeframe in which it will be possible. The Loan Officer and your agent will work hand-in-hand throughout the entire process. The real estate agent’s job is to find a house. The Loan Officer sets the parameters.
As a buyer, you need to feel confident that your real estate agent has the leverage and reputation to get action out of loan officers in the Louisville Real Estate market. Regardless of loan product, I cannot emphasize enough to audit your real estate agent’s relationship with lenders who are focused on the Louisville real estate market. The current market in Louisville is competitive, and your offer may be accepted, or not, based on your Loan Officer. If the lender you choose is average or has a reputation of making false promises, your offer will be viewed, lightly.
Your real estate agent will determine which loan officer is right for your situation. Loan officers typically focus on types of loans, meaning someone who does VA loans may not be the best fit for someone who is a conventional borrower. Your real estate agent will keep you up to date with time lines (offers, inspections, repair request, appraisal, clear to close and closing). A typical loan takes 30-45 days to close once there is an accepted offer. Your agent will be working with your loan officer during this time to make sure all goes smooth to get you to the closing table.