What do lenders look for in their clients? Although it varies by company, there are standards that are generally agreed upon in the mortgage community. One such standard that lenders look to in order to determine mortgage worthiness is the four C’s.

  • Capacity to pay back the loan. Lenders look at your income, employment history, savings, and monthly debt payments, such as credit card charges and other financial obligations.
  • Capital. Lenders consider the money and savings you have readily available plus investments, properties, and other assets that could be sold fairly quickly for cash. Having these reserves proves that you can manage your money and have funds, in addition to your income, to pay the debt.
  • Collateral. Lenders take into account the value of the property and other possessions you are pledging as security against the loan.
  • Credit. Lenders check your credit score and history to assess your record of paying bills and other debts on time. (Even if you don’t plan to buy a home now, it’s always a good idea to build and maintain strong credit. Landlords often check it to make sure that you can pay the rent; it’s also important if you want to apply for a mortgage or other credit line in the future, such as a student loan, car loan, or credit card.)

Basically, these standards are in place because no one benefits from putting you in a home you can’t afford. So do you qualify? Give us a call at 702.331.8185 to find out!