Mortgage Lending Criteria

Mortgage Lenders in Las Vegas and Nevada in general offer competitive rates on their loans, but getting the best rates possible depends on how much of a credit risk they see you as.  If you want to get the best possible deal on your mortgage, you’ll need to understand what a bank is looking for when they decide on whether to lend monety to you, and if so on what terms. 

The Three Cornerstones of Lending 

There are three main things that Nevada Mortgage lenders a looking for in prospective borrowers, Credit Score, amount of Equity, and your Debt Servicing ability or disposable income.  Get a handle on these three factors and you’re well on your way to getting a great las vegas mortgage deal.

1.  Equity:  Simply put, Equity is how much security you can provide for your loan.  If you want ot borrow $100,000, and can secure the loan against a property valued at $150,000 you have a good amount of equity in the asset – $50,000.  The more equity you have the better, in fact Hard Money lenders will lend on the basis of Equity alone in many case and having good equity can open up options like cash out refinance that are othersie unavailable.  Many Lenders require between 10-20% equity in order to lend on a home.  Having Equity means that if you default on the loan and the bank forecloses on the property, they have a good chance of getting back their principle debt.  Some banks will lend on lower Equity transactions but will impose higher interest rates or Private Mortgage Insurance. 

 2.  Credit Score:  Your credi9t score is a snap shot summary of your past history with credit.  How much you’ve had, how well you’ve used it and what your track record for repayments is like.  A good Credit score can work wonders, and Bad Credit can really hamstring you.  Check your credit before you approach your Bank! 

3.  Disposable income:  Also called debt servicing ability, this tells the bank what your ifinancial capabilities are in terms of servicing a loan.  the higher your disposable income the better, and the higher the maximum amount a bank will allow you to make your repayments.  It’s your REAL income that the bank will be looing for – uncommitted funds that you have available.  a six figure income doesn’t mean much if you have six figure expenses as well!

Ideally you’ll have all three factors on your side, but if you’re weak in one area, the other two may compensate.  The important thing is to be aware of what your bank is looking for and preapre accordingly.  doing a little homework and getting a few free online mortgage quotes can easily be the difference between getting a loan and not, once you understand the main lending criteria Las Vegas and Nevada Mortgage lenders are looking for, the battle is half won.