Tip#1
– What value will the lender consider?
One thing that is often overlooked when people are
buying rural property is that most lenders will only consider the value of the
house plus the first 5-10 acres when financing a property. That excludes
outbuildings, however a garage is allowed and can be attached or detached. Most
major banks will only consider the first 5 acres, however CMHC will consider up
to 10 and we have numerous lenders who will as well. If the lender or the
insurer questions the value, then they will generally order an appraisal.
With the recent changes that took effect for most
banks on November 1st, 2012, we have seen a drastic increase in the amount of
appraisals being ordered. If the appraisal comes in lower than the purchase
price, there are several options:
·
consider putting more than 20% down to avoid the
insurers (CMHC, Genworth, CG)
·
You may still have to go through a credit union as
they are generally more flexible with their property types
·
Pay for the difference in value if possible. For
example, if the purchase price is $300,000 and the appraisal comes in at
$290,000 for the house and first 10 acres then you can generally pay the
additional $10,000 outside of your down payment to compensate for the shortfall
in value
Tip #2- How is the property zoned?
If the property is not zoned for the purpose that you are purchasing it for, you could run into trouble in the financing process. is a link to the City of Prince George zoning Bylaw’s
Tip #3 – Water potability and
septic certificates
Your
lender may require a water potability test and/or a septic certificate. Some
lenders will accept title insurance in lieu of this however, be aware that it
could be requested from youRemember that even if you are pre-approved, the lender and insurer still have to approve the property. Please contact me with any questions.
www.christinebuemann.com
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