What should you Know about Hard-to-Finance Properties?
It is not uncommon to come across a property that is considered hard to finance. This can happen even if the buyer is well qualified. As you can imagine, this can be very frustrating, especially if the home buyer has all of their ducks in a row. Many times the buyer will take this personally.
However, the first thing you should know is this is not about you: it’s just business. When something like this happens it is almost always about the property, not the buyer.
When you are borrowing money to purchase the home of your dreams, you have to learn how to play by the lenders rules. Lenders want to invest in properties that are marketable. It’s basically their insurance should you end up defaulting on your loan.
If you don't make your monthly payments the bank will get the home back. Their goal of course is to get rid of it as quickly as possible. A marketable home would be easier for them to sell. If they lend money on a property that is not considered marketable, they will be stuck with it as no one will buy.
Here are a few things that could cause the mortgage company to refuse to finance a property:
- Fire damage
- Water damage
- Too small
- Too remote
- Improper zoning
- Incomplete construction
- Contamination
- Water problems
- Insulation issues
- And Many Other Things!
Some of these issues can be fixed by speaking with the seller. Others however are considered too damaging and will cause the lender and insurer to back out of the deal.
When it boils down to the lender is really doing you a favour when they deem a property unfit to finance. It may not seem like it in the moment, but they could be protecting you from a mountain of problems later on down the line. So just smile and move on to the next property.