Determining whether or not you are eligible for a home mortgage loan will boil down to several key factors, many based off of financial stability of yourself or co-signers; along with your credit score, price of the home, and the overall APR (Annual Percentage Rate) involved.

Also take into consideration the following dynamics for pursuing and successfully obtaining a mortgage loan for a home:

 

 

Patience is a virtue; especially when you’re dealing with hundreds of thousands of dollars or more and a prospective new home for you and your loved ones!

 

 

 

 

 

Making Sense of Property Loans

Much like a home mortgage loan, successfully obtaining a loan for a property has many common denominators such as comparable fees, a deposit, credit checks, and variations in quotes or flexibility through different loan programs available to you.

Unlike home mortgage loans however, land loans typically require more money up front (as much as 50%), and will require approval for a predesignated purpose by the state or county for what you wish to use the land for. For example, are you intending to create a business, home, or perhaps both If so, you will have to first have a professional inspector or state official come out and not only have the land appraised, in lieu with working with your agent, but also have property lines, dimensions, easements and access all evaluated before seeking a loan quote or approval. These are all very valuable terms in which you should commit to learning for the stability and success of your future property purchase!

Unfortunately, for those interested in property-loans, since these are typically just areas of land without any predesignated or already built estate or business, it’s a higher risk to the real estate agent and the turnover is not in their favor. In lieu of this, interest rates are typically much higher as well. However, just as with a home or other real estate loan, you can use the mortgage or your current home or property as collateral and even transfer the value, amount-paid, or find other alternative solutions to paying down the property to increase the likelihood of approval to gain ownership of the desired land.

Some of these tactics and options are known as mortgage portability. Don’t forget to look into mortgage offset options, lump sum repayment, and additional repayment options in finding the most practical land-mortgage or loan program and agreement for you.

On the other hand, before or after purchasing the original land, should you decide to seek a land-construction loan as you immediately desire to build a property such as a home or business on the land typically agreed upon within a 1 year period of purchase expect a much higher interest rate and an even smaller window for repaying the loan which of course, is not desirable in most situations. Although there are plenty of good deals out there on land given the current economy, many fees, increased rates, and other collateral requirements can make it difficult to qualify for or afford the required land mortgage or loan options available for you.

Lastly, it’s worth noting since the economic boom of 2008 among banks, there are still indeed many alternative options for those with less money up front or lower credit scores, such as; home mortgage loans through the Veterans Affairs (VA), the Department of Agriculture, and even federal programs for first time borrowers, such as through FHA or other state-run programs.

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