Mortgage Guide to Louisville, Kentucky

If you're thinking of buying a home in Louisville, Kentucky, there are a few things that you'll want to know about getting a Louisville mortgage prior to choosing a lender. This article explains the options that borrowers have when choosing a Louisville mortgage that are only available to residents of the state of Kentucky.

In recent years, interest rates on a Louisville mortgage have been slightly higher than the national average. Bankruptcies and foreclosures are also higher on average for Louisville than for the nation as a whole. Knowing the basics of obtaining the best Louisville mortgage for your needs can help you avoid high interest rates and potential foreclosures.

There are several Louisville mortgage options for first time homebuyers. Through the Kentucky Housing Corporation, qualifying borrowers can apply for VA and FHA loans, as well as down payment assistance. To qualify for FHA loans, borrowers must be either a first-time homebuyer or must not have owned a home within the last three years. These loans have below-market interest rates, require as little as 3% down payment, and do not require a credit check. VA loans are eligible to military veterans and require no down payment as long as the house appraises for as much or more as the purchase price.

Louisville mortgage down payment assistance is also available from the Kentucky Housing Corporation in four forms. The first is Regular Down Payment Assistance Program -- a second mortgage loan of up to $10,000 with a 6% interest rate, amortized over a period of ten years. The second, HOME-DAP, is a grant of up to $4500 that is forgivable if the buyer owns the home they purchase for at least five years. The third is available only to buyers that have a live-in disabled family member or where one of the homebuyers is over age 62. It is a $10,000 grant that is forgivable after five years. Finally, the HOME Family Program offer first-time homebuyers with at least one dependant up to $10,000 in a grant that is forgivable after five years.

Purchase price guidelines as well as income limits apply for each of these loans. For more information on obtaining a Louisville mortgage through the Kentucky Housing Corporation, visit their website at http://www.kyhousing.org/index.asp.

Individuals looking into obtaining a Louisville mortgage that do not qualify for any of the mortgage loans listed above should be aware of predatory lending practices when shopping for a mortgage. While the state has adopted some anti-predatory lending laws, they do not protect borrowers fully from predatory lenders. Kentucky's high-cost home loan laws subject loans deemed as "high-cost" to certain regulations. Lenders are able to issue high-cost home loans, but they must be able to prove that the borrower will be able to pay the monthly mortgage without difficulty, they cannot charge prepayment penalties after the borrower has owned the home for three years, and they cannot schedule payments that result in an increase in the principal amount owed on the mortgage.

The Kentucky Housing Corporation also offers mortgage classes to interested individuals that are looking for a Louisville mortgage. These classes will teach students how to choose a mortgage that best fits their needs, how to determine what monthly payment they can afford, and what to watch out for in order to avoid predatory lenders. Louisville mortgage classes are available throughout the city, and scheduled places and times can be found through the Kentucky Housing Corporation website.