Archive for the ‘Las Vegas Mortgage Lending’ Category

The IDEAL Investment

Posted on: February 21st, 2012 by Mary Kennedy No Comments
Rental homes can be the IDEAL investment in today’s real estate market because they offer a much higher rate of return than alternatives without the volatility of ups and downs that you see in the stock market.

IDEAL serves as an acronym to identify the advantages of rental properties:

  • Income from the monthly rent contributes to paying the expenses and a return on the investment.
  • Depreciation is a non-cash deduction that contributes a tax shelter.
  • Equity grows monthly as the mortgage amortizes due to some of each payment being applied to the principal.
  • Appreciation is achieved as the value of the property goes up.
  • Leverage can increase the return on investment by using borrowed funds to control a larger asset.
The combination of these characteristics working together makes rental real estate a very good investment for today’s economy and years to come. Increased rents, high rental demand, good values and low non-owner-occupied mortgage rates contribute to positive cash flows and very favorable rates of return.
Contact me for more information about actual opportunities in the Las Vegas Valley Real Estate  market.

Borrower Risk Determines Interest Rate

Posted on: February 13th, 2012 by Mary Kennedy No Comments

Regardless of what a lender quotes on mortgage rates, the actual rate paid by a borrower is based on a number of variables. Lenders determine whether to loan money and at what rate based on the risk involved with the transaction.

Factors that increase the risk that the loan will be repaid will proportionately increase the interest rate charged to the borrower. If the risk becomes too high, the loan will not be approved.

  • Loan amounts – conventional loans for more than the conforming limits set by Fannie Mae are considered jumbo loans and generally have a higher interest rate.
  • FICO score – the lowest interest rate is reserved for the highest credit scores; the lower the score, the higher the rate borrower will pay.
  • Occupancy – borrowers occupying a home as their principal residence are considered a better loan risk than second homes and investment properties.
  • Loan purpose – purchase transactions generally have the lowest interest rate while refinancing a home is generally higher.
  • Debt-to-Income ratio – a borrower’s monthly liabilities divided by their gross monthly income develops a ratio that helps lenders to assess the borrower’s ability to repay the mortgage.
  • Loan-to-Value ratio – the lower the percentage of the loan to the appraised value of the property will generally lower the interest rate.
Any combination of these factors could limit a borrower’s ability to secure a mortgage at the rate initially quoted. Being pre-approved by a trusted mortgage professional is the best way to know what rate you can expect to pay. For more information, contact me! I can get you in touch with one of my Preferred Service Providers in the Las Vegas Valley

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