TN Home and Acreage
So I found a property I like in TN. The property is a 3000 sq ft house on 125 acres. Viewed the property with my Realtor and liked it. I asked her for a recommendation for a lender and she gave me one. Got Pre-Approved. A couple offers and counter offers later we had an agreed upon deal. Lender gets notified on Friday. Ten days later the lender calls me to inform me that "they may not be able to assist me because the property has too much acreage" which I am struggling to understand.For background information I have 750+ Credit Scores, High Income, 20% to put down, and own my current home outright (est value $160,000). The purchase price of the new home and acreage is $335,00.Any explanation of my current situation or suggestions of what to do would be welcomed. by eric472 from , California. Feb 24th 2015
Let me add one more piece of information as I have been doing some research. Would it be possible to use a VA Loan or do they have restrictions on acreage as well? I am qualified for the VA program and have used it in the past however I was not going to use it because I have the 20% down and I was going to avoid the added expense of the the VA Funding Fee but I would reconsider I guess if this was an option. Any thoughts?
Linda Wintersteen (Linda123)
#63 ranked lender in Arizona - 1,256 contributions
ARE you buying as a investment ?? or primary?? it will make a difference.. linda at yourloanpartnerforlife@live.com
Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,249 contributions
Large acreage is often a challenge even for a well qualified borrower because 125 acres is not considered to be "residential" in nature for normal mortgage programs. I may have an option for you which possibly would work but it depends on your overall qualifications and the details of the home. Otherwise, your best bet may be a small local bank in the area where the property is located. Click on my name above to get contact info
Kenneth Kopper (KenKopper)
#19 ranked lender in Maryland - 542 contributions
Eric, I have not run across this in awhile but in the past (about 7 years ago), a property similar to this scenario was appraised using the value of the subject property and the 1st 5 acres to determine the appraised value and the rest of the land was not considered in determining the value of the collateral. Residential mortgage lenders are not looking to lend on the entire value of the land. This may or may not work for your scenario especially given the amount of land that is included with the property.
William J Acres (William_Acres)
#74 ranked lender in Arizona - 8,728 contributions
Typically when trying to purchase a home with a large amount of acreage, the appraiser has to look to see what's "common for the area".. If most other properties are smaller, then the appraiser is allowed to adjust down your value removing any valuation associated with the excess acreage.. but for some lenders, if the acreage is too great, then they will just deny the loan.. there is a way around this however, but it requires the seller to subdivide the home from the large acreage parcel.. This is a strategy that your Realtor and lender should be aware of .. Seller subdivides 10 acres with the home on it, and upon successful close of escrow, they allow you to purchase for cash the remaining 115 acres at a predetermined price, both sales to close concurrently.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com
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