Property Challenges
Pre-qualifying before you start shopping for a home is our key ingredient to helping you leverage the sale and avoid challenges.
You're pre-approved, but the property needs to meet guidelines too.
Sometimes it’s not the borrower that holds up financing, but the property. From disputes over the title to problems with a homeowner’s association, these problems create delays for financing and can even stop a purchase entirely. But that doesn’t have to happen if you work with a lender who understands how to find the right solutions.
Floor Plan
If the home you are purchasing has a unique floor plan, it may create problems with financing, especially if massive remodeling is required. If a home inspector uncovers issues, the property could fail to meet those standards. Most mortgages can only be used for homes that are safe and structurally secure.
HOA
Many programs restrict access to lending if there is an issue with the HOA, such as a legal situation. If your debt-to-income ratio exceeds the allowable limits because of HOA fees, your mortgage application won't be approved
Mixed Use
These properties are used for buildings consisting of commercial and residential elements in one location. Mixed-use is a popular choice as they tend to generate strong yield and pave the way to investing in more commercial property. However, a traditional buy-to-let mortgage cannot be used here, which means the requirements are not like a typical mortgage. The property must be at 51% Residential in order for Fannie, Freddie, FHA, or VA to qualify a borrower.
Mortgage Insurance
Mortgage insurance may be required on home loans; especially if there is little equity by the owner or the down payment is less than 20 percent. FHA and USDA loans typically make insurance mandatory.
Title
Many title issues can be resolved by filing one of three common documents: 1) A quit claim deed to remove heir and clear co-owners or spouses. 2) A release of lien or judgement 3) A deed of reconveyance records payment under a deed of trust.
Zoning
Zoning laws can limit the use of property, which can also cause problems for financing a purchase. If you are given assurance a zoning change will be granted, you can potentially do a “contract for deed,” where you would buy with a down payment, then refinance at a later date, giving you the time to apply for rezoning.