Loan Types Not Eligible For Financing

by : Jim Brown

Certain lenders have set policies about the types of loans that they will lend money for. One would think that any lender would be in the business of lending money, but some feel that some ventures are just not safe enough to risk losing money on. A person that is self-employed would think that they could get money to grow their business, but if they have operated the business for less than two years, there are many lenders who will pass up on the opportunity to help them.

Some loan companies are just not equipped to deal with the large amounts of money that would need to be loaned to secure land. The use of the land or the credit history of the buyer is not even considered in the equation. The loan companies have drawn the line on how much capital they have to lend and all major land deals, some exceeding only 10 acres or more, will become the victory of another loan executive at a lending institution large enough to wheel and deal.

One of the hardest loans to obtain through financial lenders such as banks and credit unions is a mobile home loan or one for a manufactured home. The scarcity of lenders has placed mobile home buyers in a predicament where they are literally forced to finance mobile home purchases totally upwards of $43,000 at a high interest rate than is offered to home buyers of residential units located somewhere in suburbia. Fair housing practices are not met when financing mobile homes and displaced refugees have noted this problem and have grown tired of taking the brunt of it.

Some lenders are not willing to finance real estate transactions that will result in the property being used for investment purposes. Perhaps this is one reason for the housing sales shortages we are experiencing today and why homes are remaining empty and unoccupied. Lenders avoid any type of financing for property that will be used for generating any type of income and this type of policy is why some farmers are losing the farms that they have worked for generations.

Some lenders are avoiding new property owners who need a construction loan. The lenders are taking a view that if the property is being financed, then the owner should wait until it is paid for to get more money to build. Some undeveloped properties remain in limbo until the real estate loan is paid in full, and by that time, the property owner has lost out on options to turn a quick profit by building and selling a home and establishing a reputation as a quality home builder.

If a person seeks a loan to refinance property they own, there are some lenders who will deny the request if the property has been placed on the real estate market to be sold. The reduction in an interest rate may be just what the property owner needs to break even on the sale of the property, and if they cannot get it, some feel it is best to take it off the market to meet the requirements for a specific lender.