Lenders Care About the Quality of Your Property
February 3, 2010 11:35 am Book, Employed Persons, First Time Home Buyer, Pre ApprovalWhen people think about a getting their mortgage they usually think it is all about them. If they can qualify to make the payments why would a bank ever say no to any property?
The reality is that the borrowers are only one part of the equation – the property is the other part.
Lenders want to make sure that if unforeseen circumstances arise and they are forced to start foreclosure proceedings that they can sell the property for market value. This means that the house/condo has to be in at least “average” condition.
Lenders may shy away from properties that are great deals because of the following:
- Refurbished grow op house
- One of those houses where there were 20 cats living there
- “Fixer-upers”
- Dirt basements
The lender also wants to make sure that the property has enough funds in the Condominium reserve funds to handle any unforeseen expenditures for the building. So if a building is 35 years old and only has $2500 in its reserve fund this will likely raise a red flag.
It is important to understand that the lender did not implement these policies to stop people from buying places. They just want to be sure that they have invested their money someplace safe – they already think you are strong now they need to confirm that the property is strong as well.
This is just one of the many reasons to be sure that you use a qualified Realtor, home inspector and mortgage broker in your purchase.
