Every state has laws to protect both buyers and sellers during real estate transactions, and Kentucky is no exception. In fact, the state’s rules around who can close real estate transactions have been a topic of heated debate.
When you buy a home, you want to know exactly what you’re getting, including the good, the bad and the ugly. Kentucky requires home sellers to complete a Seller’s Disclosure of Property Condition, which outlines every aspect of the property and whether there are any problems present. In addition to the property condition, the seller must also disclose whether there has been radon gas testing or past infestations, and if there is any pending legal action against the property.
Once you’re ready to close, you’ll find that Kentucky does not technically require an attorney to be present. Many closing transactions are completed by title agencies. That said, Kentucky does have strict laws prohibiting non-lawyers from practicing law, so non-attorneys are not supposed to answer legal questions during closing transactions. Non-attorney closings should be “point and sign” transactions. To cover your bases and ensure your questions are answered, you may want to have a real estate attorney represent you at closing, even though it is not technically required.
Kentucky is a judicial foreclosure state, which means that lenders need to go through circuit court to foreclose on a home. This process is lengthy, but it does give homeowners time to work out a solution with lenders rather than lose their home.
Kentucky is also an equitable distribution state, which means that any property purchased during a marriage will be divided equitably between the parties in the event of a divorce. This doesn’t necessarily mean property will be divided 50/50, though. The court will decide who gets marital property based on factors such as each spouse’s financial situation, how much each spouse contributed to the property and who will be living in the marital home.
In Kentucky, the seller typically pays the real estate transfer tax. The tax rate is $0.50 per $500 of value for the home, and the funds collected are kept by the county. There are exceptions to the transfer tax, such as when property is transferred between a parent and child or a grandparent and grandchild.
Kentucky has some of the lowest property taxes in the country. In fact, only seven states have a lower median property tax. The median Kentucky property tax is $843 per year. The county with the lowest property taxes is Wolfe County, which collects an average of $293 in property taxes per year. The highest property taxes are found in Oldham County, at an average of $2,244.
Even with its low property tax rate, Kentucky does offer some property tax exemptions. Property owners who are 100% disabled and those who are 65 or older may receive an exemption. The exemption doesn’t eliminate your property tax bill, but it does reduce the value of your property by $39,300, which lowers your overall property tax bill.
For 2019, the conforming loan limit across Kentucky is $484,350. Although allowances are made for high-cost areas, all counties in Kentucky adhere to this limit.
A conforming loan is a loan that meets the criteria set by the two largest loan buyers, Fannie Mae and Freddie Mac, both of which are government-supported enterprises. Each year, the limit set on conforming loans is based on the average change in home price every year.
The Kentucky Housing Corporation offers loan and down payment assistance programs to help homebuyers. Each program has different requirements to qualify for a mortgage.
This program offers a 30-year, fixed-interest rate program for homebuyers. The Preferred program requires borrowers to obtain mortgage insurance.
KHC FHA offers government-insured, 30-year, fixed-interest rate mortgages.
This program for qualified military veterans offers a 30-year, fixed-rate mortgage with no down payment or mortgage insurance requirement.
This program offers a 30-year, fixed-rate mortgage with no down payment if you purchase a home in a rural area as defined by the Rural Housing Service (RHS).
KHC offers up to $6,000 in down payment assistance to those who qualify. Regular DAP offers a 10-year loan at a 5.5% interest rate, and Affordable DAP offers a 10-year loan at a 1% interest rate.