Kentucky Housing Corporation (KHC) is looking into details about what the Economic Stimulus Plan means to Kentucky's housing programs. Please have patience while we study all the implications to give our customers the best information available. To read more about the Economic Stimulus Plan, please visit www.FinancialStability.gov.
Frequently Asked Questions
- I read in the paper I can receive $7,500 or $8,000 back for buying a house. I bought a house in the last year, so how do I get my money?
- I understand that I can have my interest rate reduced just by asking for it. How do I go about doing that?
- What if I just stop making my payments – can I qualify for a lower rate?
- I thought I could get $1,000 a year for making my payments on time under this new program. How does that work?
Does Kentucky Housing Corporation provide funds or grants to make up the difference between the appraised value of my house and what I owe?
I do not have a Kentucky Housing Corporation loan but am behind on my payments (or may be falling behind, just lost a job, etc.). Where can I get assistance?
What if I have a second lien and the total debt on the property exceeds 105 percent?
May I refinance and take cash out to pay other debts?
If I am behind on my payments, can I apply for the refinance option?
Do I need to be delinquent in order to qualify for a Home Affordable Modification?
- Will the Home Affordable Modification help me if I can easily afford my current payment but my property value is now less than the amount I owe?
How does loan modification work?
I heard that Kentucky Housing Corporation has money to do weatherization or energy efficient repairs to my house. How do I apply for those funds?
1. I read in the paper I can receive $7,500 or $8,000 back for buying a house. I bought a house in the last year, so how do I get my money?
There was a provision in the Housing and Economic Recovery Act, passed in July of 2008, which allowed first-time borrowers to receive a repayable tax credit of 10 percent of the sales price of their home, up to $7,500. However, that was not allowed on loans financed with a housing finance agency, like Kentucky Housing Corporation.
That law changed in 2009 allowing borrowers with KHC loans to qualify and increased the amount up to a maximum of $8,000 for loans closed after December 31, 2008 (ends December 1, 2009).
Borrowers obtain the credit by filling out income-tax forms. The credit is not available at the loan closing.
2. I understand that I can have my interest rate reduced just by asking for it. How do I go about doing that?
There are two options for reducing your interest rate. Each has very specific qualifying guidelines. First, your loan must be a CONVENTIONAL loan with Kentucky Housing, and cannot be an FHA, VA, or RHS loan.
If you do have a conventional loan with KHC and are current on your payments but think the value of your house has declined so much that you could not refinance, we may be able to help you. Some of the qualifying criteria include:
- You must occupy the house as your residence.
- You must have sufficient income to make the new payment.
- You cannot get additional money from the new loan proceeds.
If you have a conventional loan through KHC, please click here for a list of approved lenders to contact for more information.
If you are either behind on your payments or can demonstrate that you are likely to fall behind, due to a job loss, family death or illness, or some other hardship, you may qualify to have your interest rate “modified.” Some of the qualifying criteria include:
- You must have closed your loan before January 1, 2009.
- You must sign a financial hardship statement.
- You must still live in the property.
- You must go to counseling and agree to a workout plan.
- You must fully document all income.
3. What if I just stop making my payments – can I qualify for a lower rate?
Not making your payments is never a good idea. Falling behind on your mortgage will result in damage to your credit rating, and could impair your ability to obtain credit in the future. If you have suffered financial hardship and think your ability to make your mortgage payment on time may be jeopardized, and you qualify otherwise, let us look at refinancing your existing mortgage under the guidelines above.
To be eligible for loan modification through KHC, you must have a KHC loan.
If you do not have a KHC loan, please contact your servicer or contact the Homeownership Protection Center toll-free at (866) 830-7868 or visit www.ProtectMyKYHome.org.
4. I thought I could get $1,000 a year for making my payments on time under this new program. How does that work?
If you have: missed one or more payments, can demonstrate financial hardship, and qualify for a “modified” payment or a reduced interest rate on your existing loan, then make all of your payments on time each year, you may be eligible to receive the lesser of ½ of your reduced payment amount or $1,000 annually. The payment is applied directly to the principal balance of your loan; it is not a cash payment to the borrower.
5. Does Kentucky Housing Corporation provide funds or grants to make up the difference between the appraised value of my house and what I owe?
No.
6. I do not have a Kentucky Housing Corporation loan but am behind on my payments (or may be falling behind, just lost a job, etc.). Where can I get assistance?
Kentucky’s Homeownership Protection Center is designed to assist homeowners who may be facing delinquency or foreclosure. Call the Homeownership Protection Center toll-free at (866) 830-7868, or visit www.ProtectMyKYHome.org for assistance.
7. What if I have a second lien and the total debt on the property exceeds 105 percent?
You may still be eligible for a refinance if the first lien does not exceed 105 percent of the value of the property and all junior lien holders agree to subordinate to the new first mortgage.
8. May I refinance and take cash out to pay other debts?
No. Only transaction costs may be included in the refinanced amount.
9. If I am behind on my payments, can I apply for the refinance option?
No. Borrowers who are currently delinquent on their mortgage will not qualify. You should contact your servicer to see if a Home Affordable Modification is an option for you.
10. Do I need to be delinquent in order to qualify for a Home Affordable Modification?
No. Responsible borrowers who are struggling to remain current on their mortgage payments are eligible if they are at risk of imminent default, for example, because they have had or will soon have a significant increase in their mortgage payment and they cannot afford the new payment. A servicer participating in the program must screen every current borrower to determine if they meet the minimum eligibility criteria and to determine if they are at risk of imminent default.
11. Will the Home Affordable Modification help me if I can easily afford my current payment but my property value is now less than the amount I owe?
No. Home Affordable Modifications are designed to prevent foreclosures by making mortgage payments affordable for working homeowners struggling to retain homeownership. The plan is not intended to replace equity lost by home price depreciation. However, by preventing avoidable foreclosures, the plan is expected to stabilize and eventually strengthen property values, which will benefit all homeowners.
12. How does loan modification work?
To be eligible for loan modification through KHC, you must have a KHC loan. If you have a KHC loan, please contact KHC toll-free in Kentucky at (800) 633-8896 or (502) 564-7630, ext. 216, so you can speak to someone about this process.
If you do not have a KHC loan, please contact your servicer or contact the Homeownership Protection Center toll-free at (866) 830-7868 or visit www.ProtectMyKYHome.org.
The Making Home Affordable Web site also has information about refinancing and loan modification options.
13. I heard that Kentucky Housing Corporation has money to do weatherization or energy efficient repairs to my house. How do I apply for those funds?
Kentucky Housing is currently partnering with the Community Action Councils and other agencies in an initiative called the “Clean Energy Corps.” The first pilot communities are Fayette County, Clark County, and Bourbon County. If you live in one of those counties, you can contact the Bluegrass Community Action Council at (859) 233-4600 to complete an application.