You may have all the credentials that mortgage lenders are looking for, but you are only half the picture. Your home is the collateral that will secure your mortgage and mortgage lenders will take a good look at your real estate before advancing any money. The best real estate for mortgage lenders is a “cookie cutter” house in an urban or suburban neighbourhood where the houses are similar. These types of properties are easy to value and they sell quickly in a foreclose situation.
Once you get out of the city though things become a little grey. Rural real estate is much more difficult to value since there is much less sales activity in the neighbourhood. This uncertainty will make a mortgage lender more cautious on the amount of a mortgage they will advance. Also, rural properties tend to be older dwellings than their urban counterparts making them more likely in need of a new roof, furnace or other substantial repair.
There are other characteristics of rural real estate that may make mortgage lenders skittish. These types of homes usually don’t have access to the same services that in-town properties enjoy. Some of these services include, municipal water, natural gas lines or sewer services. There are various acceptable alternatives for a rural homeowner to replace these essential services, but mortgage lenders will often require confirmation of their functionality. Rural real estate often comes with larger parcels of land and as most mortgage lenders don’t lend on land value alone they will often discount the value of land in excess of 5 or 10 acres.
If you are looking to mortgage your rural real estate don’t worry though, there are always options available. If your mortgage lender has concerns, they can usually be addressed by adding mortgage insurance or alternatively you could shop for a lender that will accept your property “as is”. If your property is unique because of a farming component, bed and breakfast unit or zoning issue then a specialty lender might be the answer. If you can’t find a lender to mortgage your property then seek the advice of an accredited mortgage professional.