Thursday, Jan. 31, 2019 | 2 a.m.
The Las Vegas we know today is, in many ways, nearly unrecognizable from the Las Vegas we knew 10 years ago. Of the changes we’ve seen in the past decade, the recovery of the housing market has been paramount to our growth as a community. Today’s market is steadier and more sustainable, partially as a result of the lending safeguards that were instituted after the collapse to protect buyers. Here is a look at how key lending practices have changed.
Loan options before the crash
Buyers had more, higher-risk loan options including adjustable rate mortgages (ARMs) with high lending caps and interest-only loans. These types of loans typically meant that buyers had lower monthly payments but the loan amount could balloon unexpectedly to cover interest costs.
Loan qualifications before
Low and no-documentation loans were common for buyers whose credit scores were too low, buyers who couldn’t prove income and/or buyers who didn’t have enough money to cover the down payment.
Loan transparency and disclosures before
Prior to the crash, many lenders had not been transparent with buyers about the terms of their loans, cost estimates and underwriting considerations.
Loan options today
Most new home loans are standard, 30-year fixed rate mortgages. ARM options are still offered but under tighter regulations and with rate caps to prevent the interest rate from jumping too high. Buyers seeking an ARM also have to qualify on a worst-case-scenario basis accounting for the highest possible interest rate.
Loan qualifications today
Loans require more documentation and a thorough vetting process for buyers. Buyers must hit the credit score threshold required by the lender and must put a minimum of 3 or 3.5 percent down for most lenders. If your down payment is less than 20 percent, you will also be subject to additional fees.
Loan transparency and disclosures today
Lenders are required to provide a closing disclosure to ensure the buyer is fully aware of the lending terms and payments required.