When you’re ready to get a mortgage, you’ll need to talk to one or more lenders about what they can offer you. Be sure to be up front with them about the type of property you’re buying, since that can really matter. Many buyers never think of that when they find a place they like. They see it as home, so they head out to get a mortgage. It can be very frustrating when they discover that they won’t be able to buy the place they love because of a problem with the mortgage options they have. By choosing to let your lender know right away about the type of property you’re buying, you’ll be much better prepared if the lender turns you down based on property type. Then you can look for a different lender to help you get what you need.
Is it a free-standing home?
A free-standing home, which is often called a single-family home or single-family residence, is just what it sounds like. You’re buying a house that’s not attached to another home, and that is surrounded by at least a little bit of land. Whether you’re on a small city lot or you’re out in the country on acreage, you don’t share walls with another family or person. That’s the most common type of home that people live in when they’re not in a densely packed urban area, and lenders can provide a mortgage on that type of property. That’s good news for anyone who wants to buy a single-family home, but can be a concern for people who want to buy other types of property.
What about attached places?
When you purchase a home that’s not detached, such as a multi-family property, an apartment, a condo, or a semi-detached house, you have more limited options for your lenders. While most lenders still offer mortgages on these kinds of properties, they can be more difficult to get and can result in different rates and fees. It’s very important that you ask your lender about the types of properties they finance and what is required for those properties. For example, getting a mortgage on a single-family home requires that you have homeowner’s insurance in place, but you can’t get that same type of insurance coverage on a condo, where you don’t own the building.
Does your building matter?
Lenders may not want to loan on condos or apartments in certain buildings, either, because the buildings may be struggling financially. Some mortgages are easier to get than others, and part of that is based on the type of property you want to purchase. Not revealing that information to the lender right away can mean that you’re expecting to get a mortgage that you will be denied for, and that can be devastating when you’re planning on getting into your new home and have a closing date in mind. If you work with your lender right from the beginning, it’s possible to get a mortgage on the kind of property you really want, even if there are some concessions that will need to be made.
What about the location?
Some buyers are concerned that the location of their desired property will keep them from getting a loan, but that’s generally not the case. Lenders aren’t concerned with whether the property is in an affluent, highly desired area or one that is not as desirable, as long as the home appraises at or above the purchase price that is on your contract. The appraiser will take the location into account, along with the comparable houses, and the size and condition of the home. So, location does matter, but not in the sense that it would get your loan denied based on it. Lenders want to know that they are making a good financial investment, and that is what they focus on.
Are there any special circumstances?
While lenders have set guidelines they will agree to when offering a mortgage to you or any other buyer, the area in which you live and what’s typical for that area may matter quite a bit. For example, a lender that works primarily in the urban area of a big city may be much more used to providing mortgages on apartments and condos than one that typically works with properties in a much more rural setting. It’s important to seek out a lender that will be right for you, and that understands the type of property you want to purchase and the type of insurance it must have.
Taxes, HOA fees, and other expenses are different based on property type, as well, so you need to work closely with a lender familiar with those things on the kind of property you’re looking to purchase. That way you’ll have a smoother transaction, and less to worry about when it comes to having a lender deny you based on the kind of property you want to purchase. There’s a lender out there for every different type of property. As long as you make sure to find one that’s comfortable with the kind of property you’re buying, you’ll have fewer worries during the home buying process.
2 Point Highlight
Some mortgages are easier to get than others, and part of that is based on the type of property you want to purchase.
If you work with your lender right from the beginning, it’s possible to get a mortgage on the kind of property you really want, even if there are some concessions that will need to be made.
