Mortgage For Rural Property on 38 Acres
by Denise W from Rural America
Ask Kate about a mortgage for a rural property on 38 acres: Private money lenders and local community banks can often be your best source of money for financing rural properties. In fact, just yesterday I was asked by Denise how to get a mortgage for a home greatly in need of major repairs that's situated on acreage.
Mortgage For Rural Property on 38 Acres By Denise who lives in rural America
Kate, I need a mortgage for rural property on 38 acres. In fact, I have a property purchase agreement for a house in my Father's estate with a $40,000 equity mortgage that is not assumable.
I need a mortgage before I can submit the purchase and sale agreement. I need the LOWEST monthly payments.
Banks are questioning if it is seasonal, rental, commercial? What is the best way to go?
It is currently vacant, on 38 acres of woods, with a separate garage and a shed. Two buildings were used for rental. I could not rent it out yet, but ASAP. Both buildings need a lot of work. They need separate water and electric as the two buildings are on the same wire/pipe lines.
Last I knew, the water was not working. The electric lines run through trees. The water supply would run out. The last tenants trashed the places so clean and pickup, painting and repair work is needed.
I figure I would want to ask for an extra $10,000 to help with expenses and I will probably have to pay for all the closing costs, deed and survey and such.
I guess a 30-40 year mortgage, fixed or variable? I guess that would change the amount of points/down payment? I am living on alimony but have no loans/mortgages, only bills to run my current home.
Ask Kate answers: Mortgage For Rural Property on 38 Acres and Private Money Lenders
Now right off I can tell you this rural property doesn't sound like a candidate for a conventional mortgage. I also doubt it's going to pass FHA appraisal guidelines.
So, I'd begin looking for local mortgage lenders. Here's why.
Local Community Banks or Online Mortgage Lenders
Local community banks understand the terrain and can give you more concrete answers for tricky situations. Imagine asking online mortgage lenders specializing in big cities whether or not they required running water to loan on a property!
In addition to local community banks are private money lenders. Specializing in hard to finance properties, they have more leeway with housing in need of repairs.
Mortgage Affordability and Mortgage Pre-Approval
But before you address the property issues, take these three steps first.
- Know your upper limits. Start off on the right foot by determining mortgage affordability.
- Get your ducks in a row. Use my free Mortgage Information Planner to organize your paperwork.
- Contact a couple of small banks to begin the process of mortgage pre-approval.
Local Credit Unions
What is your next step if the local community banks sigh when they see you and clap as you leave? Time for more leg work... also known as extending your feelers.
While you are still at the bank, ask the representative for another course of action. The best mortgage lenders network with each other so small community banks can be a convenient source of referrals.
Inquire specifically into private lenders, local credit unions and real estate appraisers specializing in rural properties.
Call each of them to see where it leads. There's no getting around it, this will take some old fashioned legwork. But if you are able to finance the rural property, any work entailed will be worth the effort. (More on low down payments below.)
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