Mortgage lenders finance buyers so that they can buy their dream homes. Let’s look at the best mortgage lenders in Kentucky and assess which is ideal for home buyers amidst sporadically rising interest rates.
Reviews: 3 Best Mortgage Lenders in Kentucky
1. Rocket Mortgage, Kentucky
Nationwide Coverage
Rocket
- Min. Credit Score: 620
- 📍 Coverage: 45 markets
4/5
(2,031 reviews)
4/5
(2,031 reviews)Rocket Mortgage is an online mortgage lender and is quite popular for refinances. In 2021, Rocket Mortgage achieved $1 billion in annual closed loan volume and became the biggest mortgage lender in the U.S.
- Pre-Approval Speed: 8 minutes
- Credit Scores against Loan Types:
- 580 – FHA, VA
- 620 – Conventional
- 680 – Jumbo
- Interest Rate: Same as National Average (7%)
- Days to Close: 47 days
- Types of Loans:
- Offers fixed- and adjustable-rate conventional and jumbo loans, FHA loans
- Doesn’t offer USDA, home equity, HELOCs, land loans, or loans to purchase foreclosures
- Offers fixed- and adjustable-rate conventional and jumbo loans, FHA loans
What You Need to Know about Applying for a Mortgage from Rocketmortgage.com –
- How to apply: Online via rocketmortgage.com website or in-person at one of the 4 branch offices in Charlotte, Cleveland, Detroit and Phoenix.
Rocket Mortgage has 4 out of 5 stars on Consumer Affairs.
Nationwide Coverage: Rocketmortgage.com is available in 50 states.
2. Wells Fargo, Kentucky
Best for Variety of Products
Wells Fargo
- Min. Credit Score: 600
- 📍 Coverage: 45 markets
- 4/5
(2,775 reviews)
Wells Fargo is one of the four largest banks in the United States, and it provides services such as home equity loans and home equity lines of credit
- Pre-Approval Speed: Undisclosed
- Credit Score:600
- Interest Rate: Same as National Average (7%)
- Days to Close: 30-90 days
- Types of Loans:
-
- Conventional loans
- Federal Housing Administration (FHA) loans
- Department of Veterans Affairs (VA) loans
- U.S. Department of Agriculture (USDA) loans
- Jumbo loans
- Refinance loans
- Cash-out refinance (certain loan products)
- Fixed-rate loans
- Adjustable-rate loans
- Construction loans
- Union Plus mortgage
-
What You Need to Know about Applying for a Mortgage from WellsFargo.com –
- How to apply: You can apply for a mortgage from Wells Fargo online, by calling, or by visiting a local consultant.
Wells Fargo has 4 out of 5 stars on Consumer Affairs.
Nationwide Coverage: Wells Fargo are available in all 50 states.
3. Ally Bank, Kentucky
Best for First-time Buyers
Ally Mortgage
- Min. Credit Score: 620
- 📍 Coverage: 45 markets
- 3.75/5
(1,030 reviews)
3.75/5
(1,030 reviews)Ally Bank is an online bank founded in 2009 in Detroit. Formally known as GMAC. Ally provides conventional banking products and services and charges no lender fees.
- Pre-Approval Speed: 3 minutes
- Credit Score: 620 for all typical loans and 700 for Jumbo loans
- Interest Rate: Same as National Average (7%)
- Days to Close: 35-45 days
- Types of Loans:
- Conforming
- Jumbo
- Refinance
What You Need to Know about Applying for a Mortgage from Ally,com –
- How to apply: After completing the online application, upload, sign, and submit the required documents. Application to closing can take weeks to months. Only in-person closings are allowed.
Ally Bank has 3.75 out of 5 stars on Consumer Affairs.
Nationwide Coverage: Ally.com is available in 45 states and Washington, D.C. Home loans from Ally are not available in the states of Hawaii, Massachusetts, New Hampshire, Nevada, and Virginia.
What is a Mortgage Lender?
Mortgage lenders are real estate individuals or financial institutions lending money to borrowers for financing their home purchases.
The median price of homes in the U.S. is 8% more than last year and stands at $398,500. This is not small if you don’t have any cash reserve.
To buy a house in America, you either need full cash. Or you can borrow money from a lender. The mortgage loan amount depends on various factors like your credit score, property market value, income statement, current housing market trends, etc.
» Reviews of Mortgage Lenders: Check out the reviews of U.S’ best mortgage lenders in 2023
How do Mortgage Interest Rates Work In Kentucky?
Finding the right mortgage is critical when borrowing money from a mortgage lender.
The interest rate determines the long-term cost you incur when buying a house. So, selecting a lender with an affordable mortgage interest rate is critical.
Every borrower has different financial needs, and that’s why there are multiple types of mortgages you can choose from.
Types of Mortgage Rates
Home buyers looking for an affordable mortgage can compare the various interest rates and determine the best fit for their situation. The two types of mortgage rates are fixed-rate mortgages and adjustable-rate mortgages. (ARMs)
Adjustable Rate Mortgage vs. Fixed
Fixed-Rate Mortgage: A home loan with an interest rate that stays the same throughout the life of the loan. This means that your monthly repayment amount will stay the same. Borrowers can estimate the entire buyer closing costs and plan ahead of time.
Adjustable-Rate Mortgage: A home loan has an interest rate that changes over the life of the loan. The interest rate can vary from month to month based on market indexes. How often the interest rate changes depends on your loan agreement.
The mortgage lender may also offer a reduced interest rate if you are making a large downpayment!
The monthly payments are directly proportional to the type of interest rate you choose. You can calculate the final costs for the property you want to buy based on your financial position and specific loan terms.
» Kentucky Closing Cost Calculator for Buyer: Find out how much you pay in closing costs as a buyer
15-, 20- and 30-Year Mortgages
A home buyer can choose the period to repay the mortgage. It can either be a 15-year fixed rate or a 30-year adjustable rate mortgage.
A short-term loan, like a 15-year or 20-year loan, means higher monthly payments. However, you will pay substantially less than the interest on a 30-year loan.
You can decide which type of mortgage period is ideal based on your financial situation, like current income and assets.
What Affects Mortgage Rates?
When borrowing money for purchasing a home, the mortgage interest rate can be a precursor to how much the property will cost. The factors that affect mortgage rates also have a role to play here.
- Inflation
- Federal Reserve Monetary Policy
- Economic Growth Rate
- Housing Market Conditions
Mortgage Rates and Real Estate Market
The state of the real estate market impacts mortgage rates and vice versa.
If the mortgage rates are high, there will be limited home buyers choosing to get a mortgage, and homes will spend more days on market, making it a buyer’s market.
If the mortgage rates are low, then there will be more buyers bidding for properties. Home sales will be faster, and homes in desirable locations will most likely win the bidding war amidst multiple offers, making it a hot seller’s market.
While a real estate market crash may not happen in 2023, the housing market correction will affect how many homes are sold or bought.
» Real Estate Market Kentucky: Find out if 2023 is the right year to get a mortgage or not
Types of Mortgage Loans
1. Government-Backed Mortgages: The U.S. promotes home ownership across America with FHA, VA, and USDA loans. The government is not a lender here, but has organizations like the FHA (Federal Housing Association), USDA (US Department of Agriculture), and the VA (Veterans Administration Department). to get your mortgage processed via available lenders.
2. Conventional Loans: A conforming or non-conforming loan offered by a non-Federal organization. Best for high-credit score borrowers.
3. Jumbo Loans: Loans that fall way above the general borrowing limits. Most suitable for borrowers looking to buy an expensive property
4. Fixed-Rate Mortgage Loans: A mortgage loan where the interest rate is fixed and doesn’t change over the lifetime of the loan. The monthly payment doesn’t change till the loan is closed.
5. Adjustable-Rate Mortgage Loans: A mortgage loan where the interest rate changes as per the frequency agreed upon with the lender. The monthly payment will change over the lifetime of the loan.
6. Other Types:
- Balloon Mortgage Loans
- Piggyback Loans
- Hard Money Loans
- Construction Loans
How to Get a Mortgage?
Methodically plan the property purchase. From strengthening your credit score to hunting for the house you want, everything takes time. A step-by-step process to get a mortgage typically looks like this:
- Improve Credit Score: To avoid paying higher interest, you must strengthen your credit score. Making timely payments for your financial obligations will help improve your score over time. Even with a bad credit score, you can get a mortgage, but the interest rate will be significantly higher.
- Make Wise Investment Choices: Saving cash from your monthly income and investing in the right place can help you build your savings. These savings can be used as a deposit for your new house.
- Find Out How Much House You Can Afford: Your lifestyle will ultimately play a role in successfully maneuvering through a mortgage. Evaluate your finances against the mortgage payments you will have to make before locking the mortgage.
- Choose the Right Type of Mortgage & Lender: Because of the variety of options in the market, it is important to research the regulations involving each type and determine the best type for your situation. Choose a mortgage lender only after comparing a few options in the market.
- Hunt for Properties: While you research for lenders, you can also look at homes for sale on home buying websites like Houzeo and shortlist a few desirable ones.
- Submit Loan Application: The final step in the process of getting a mortgage is submitting the loan application & awaiting the pre-approval.
» Mortgage Loan Preapproval: All you need to know about mortgage preapproval
Types of Mortgage Lenders in Kentucky
In the U.S., there are different types of lenders to choose from based on the incentives they offer. This criterion is also important when you are shopping for lenders to choose the best one.
- National Banks: Banks are probably the oldest lending institutions. Interest rates are usually high, and the type of mortgage you get depends on your creditworthiness.
- Credit Unions: While they offer the same services as a bank, credit unions are exempted from federal taxes and don’t run for profit. The interest rates are also low compared to other lenders.
- Non-Bank or Online Lenders: Any private organization apart from a bank or credit union that lends money. Next-gen online mortgage lenders like Rocket Homes and Better Mortgage are considered non-bank lenders
- Mortgage Brokers: This is not a type of lender but a middleman who helps you get the best-suited mortgage. A mortgage broker will not lend you money. Instead, they may help you shop for the best lender in the competitive lending market.
» Best Mortgage Brokers Kentucky: Find out who is 2023’s best mortgage broker
How Mortgage Lenders Work
When a potential borrower applies for a mortgage, mortgage lenders look at their financials and assess eligibility. The preliminary information used by a lender is your income statement, job history, etc
Borrowers will a high credit score can get pre-approved for a loan. This means that the lender is ready to finance your real estate transaction even before looking at the property you have chosen!
This doesn’t mean you can’t get a mortgage if you have a bad credit score. Some money lenders don’t mind lending cash to inadequate credit holders.
» How to Buy a House in Kentucky With Bad Credit Score: Learn how you can buy a house with a poor credit score
What are Mortgage Lenders Looking For?
Before lending money, a mortgage lender will evaluate your creditworthiness and repayment ability. Typically, a lender will look at the following:
- Income History
- Credit Score
- Debt-to-Income Ratio
- Property You Want to Buy
- Current Assets and Liabilities
- Downpayment
After assessing these key areas, the mortgage lender will decide whether to offer you a mortgage. If your application is approved, the lender then schedules a home appraisal.
There is a chance of overpaying for less valuable property. A lender will hire a home appraiser to determine the property’s market value and ensure they don’t process more money than the worth of the collateral property.
» Home Appraisers Kentucky: Check out the best home appraisers in the U.S
Choosing Between Two Mortgage Lenders in Kentucky
With the variety of mortgages and lenders available in 2023, choosing the best one can be overwhelming.
Before you choose a mortgage lender, consider shopping the market based on:
- interest rate offered
- downpayment
Frequently Asked Questions
Should I shop for a home or a lender first?
Selecting a mortgage lender should be your first step in your home-buying journey. This will give you a better understanding of your budget and criteria. You can then set realistic expectations about your new home and find properties that best fit you.
What is Private Mortgage Insurance (PMI)?
Private Mortgage Insurance or PMI is a form of insurance that you will need if you take a conventional loan to finance your new home. It protects the lender’s interests if you fail to pay back the borrowed money.
How do I get the best mortgage rates?
You can get the best mortgage rates by increasing the downpayment for your home and improving your credit score. Further, if your debt-to-income ratio is low, chances are that your lender will charge you a lower interest rate as well.
What are the best online mortgage lenders?
The top online mortgage lenders in America include Better.com, Rocket Mortgage, Ally Bank, New American Funding, etc. You can select based on the type of mortgage needed, the location, and the services provided.
What FICO score do mortgage lenders use?
Most mortgage lenders refer to FICO® Score 5 that includes information about payment track record and the accounts in your name. Some lenders also refer to the FICO® Score 2 from Experian and TransUnion's FICO® Risk Score 04.
Are online mortgage lenders safe?
Online mortgage lenders are generally considered safe. However, like anything on the internet, you need to verify the lender’s legitimacy. Thoroughly research the mortgage lender you have chosen before moving ahead with any transactions.
Do mortgage lenders look at credit card statements?
Typically, mortgage lenders examine the report provided by your credit card company that lists your payment history. However, certain lenders may ask to see your credit card statement for the past three months if your profile is flagged as risky.
Eager to Know How Houzeo Works?
We’ve got you covered. Check out the following video to understand how Houzeo works and why it is one of the best For Sale By Owner websites in the U.S.
» NEED MORE CLARITY? Read exclusive Houzeo reviews and learn why it is the best FSBO site in America.
Also Read
- What Hurts a Home Appraisal: What are the things that can lead to a bad home appraisal?
- Cost of an appraisal in Kentucky: Find out the cost of a home appraisal in your area
- Home Appraisal vs Home Inspection Kentucky: Is there any difference between an appraisal and an inspection?
- Foreclosures in Kentucky: Check out ways to save your house from a potential foreclosure
Recommended for Buying a House
- Buy a House in Kentucky: Check out our guide to buying a house in the Kentucky
- Best Time to Buy House in Kentucky: Is 2023 the right year to buy your house?
- Best Realtors in Kentucky: Work with the best realtors in U.S to buy your dream home
- Homes For Sale By Owner: Find your dream home on Houzeo Marketplace
Related: sell house for cash, better mortgage
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