Ask the expert: Financing a real estate purchase
Know which loan conforms to the property before you apply to a lender.
Question: Are you all set with your financing?
Answer: My buddy has me all set with a great rate.
NOT SO FAST… will the property conform to the type of loan you have been assured you’ll be approved for, at this great rate?
Here is where your Realtor comes in and guides you through the process in determining if you will get that loan or waste three weeks thinking it’s a breeze only to find out the property: Type, Location, Association, or occupancy doesn’t allow the loan you are “pre-Approved” for.
The Government back loan programs such as a VA loan and Rural Development and other limited scope programs have several stipulations that can cause you to waste a lot of time on the wrong loan type.
If the property has any of these characteristics the Mortgage company may not be able to fund the loan: On-site rental program, property in an association where 10% of the sites are still owned by the developer, or if 10% or more owners are delinquent in their dues. If that waterfront camp is only accessible seasonally, if the condo board doesn’t have adequate directors liability insurance, or in the case of VA loans the electric panel isn’t up to code these thing may kick you out of the loan you thought you were going to get. There are even more examples of non-conforming type properties but suffice to say know which lender can help you puts you ahead of the curve when making an offer, or when meeting the timetable for the purchase contract.
I recommend you try a portfolio lender first. The local savings and loan banks can offer financing on any type of property with a variety of loan packages. It may be more money down, a higher interest rate, or an adjustable rate program. But if you want to buy, the local bank can make a local decision in-house…or put you in a government program if the property conforms.