Somewhere we had gotten the idea that the perfect home for us
would be a steel frame, metal building. Unique, yes. Hard to
finance, definitely.
Fifteen lenders turned us down when we found an existing metal
home to purchase. Many considered the property as
unconventional. Some considered the home an agricultural
building. Most wanted at least 50% down on the property. The
ones that didn't mind about the home, didn't want to finance a
property with five large barns and cattle pens. They considered
it a commercial property.
Talk about frustrating. We turned to a small town bank near the
property and found that they were more than willing to finance
the property at our terms.
You may not be so lucky. A metal home on a farm may not be what
you are looking for, but you may want a 3,000 square foot log
cabin with cathedral ceilings and a dance studio. Or you may be
looking at building something totally unique.
Lenders don't just look at you, they also make approvals based
on the property. The property is their collateral in case you
default. You can have a great property and be a lousy borrower,
or an excellent borrower with a lousy property. You won't get
anywhere. You have to be a good borrower with a good property to
get good terms.
The lender is simply looking for a property that they can sell
quickly and for as much as possible. Unique homes represent
longer selling times to lenders. Foreclosures cost lenders a lot
of money, so they like to only finance homes which look like the
others in the neighborhood in terms of size, number of bedrooms
and style.
These comparables help justify the sale price of your home. When
you apply for a loan, lenders will determine whether or not the
home is similar to the other homes in the area.
We consider our two-story living room wall of native rock and
barn exterior reflective of our lifestyle. But it isn't in the
top-ten list of home amenities in the area. The lender's view:
if there is a need to sell quickly the home may not get full
value.
Unless an appraiser can find several homes like yours in the
immediate area, the appraisal for the property is likely to be
less than you want. The lender will not lend beyond the
appraisal value.
The lender will make the mortgage based on the lower of the
sales price or the appraised value. If your sales price is
$200,000 and the appraisal is $150,000, the lender will base
your loan on the $150,000. If you put 20% down, the maximum loan
you could receive is $120,000. You would have to come up with
the $80,000 difference at closing.
You should be wary of unusual upgrades and unique designs. You
also need to be sure that you can resell the property if you
need to. If you aren't sure of the marketability of something
you are adding to your property, call a local broker and
remember that one person's treasure may turn off a potential
buyer's lender.
Copyright 2006 #1 Loans USA
About the author:
Martin Lukac, represents #1 Loans USA
http://www.1loansusa.com a
finance web-company specializing in real estate/mortgage market.
We specialize in daily updates, rate predictions, mortgage rates
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