Mortgages For Unconventional Homes

(If you have bought a house recently and taken out a mortgage, you probably had to field about one hundred phone calls from different lenders and mortgage brokers that seemed to be literally fighting for your business. )

It was your job to weed through the different offers and find a loan that worked best for you.

Now this is how things go if you are looking to take out a loan for a normal, conventional residential home.

But what if your home was something a little more out of the ordinary?

If you are one of the growing people looking to take out a mortgage for some sort of an untraditional house such as a log cabin, yurt or prefabricated home, things could be a bit more difficult.

A November 26, 2006 article by Bob Tedeschi of The New York Times, “Finding loans for yurts or prefabs,” discusses how taking out a loan for one of these types of structures may be a bit more difficult.

“Depending on ones credit, it is usually easy enough to find financing for a conventional house. But what about a yurt?”

“Yurts, circular structures still built by the Mongols, occupy a tiny, but growing, niche in residential architecture, a segment in which owners take satisfaction in the knowledge that no one within miles lives in a house like theirs.”

The reason why unconventional homes are harder to find loans for is because there are not that many of them, so it makes it harder for industry professionals to appraise their value.

Finding a loan can be much more difficult than with a traditional home.

“Lenders sometimes balk at lending money for properties they believe they cannot accurately appraise, or for which there may not be a strong market if the house is sold. Real estate and mortgage industry executives say that in most cases, borrowers can secure a loan that reflects their propertys true value, even if that value is not necessarily apparent at first glance to bankers.”

The trick to finding financing for an unconventional home is to shop around, and try and contact other people with your type of home (if there are any others out there) to see what they did.

“Stuart Tyrie, a vice president of Wells Fargo Home Mortgage, said that anyone thinking of buying a nontraditional house should spend time speaking with prospective lenders to make sure they have experience making loans on this type of home.”

People who are looking to finance their prefabricated home may also run into trouble, although these are not seen as uncommon as a log home or yurt.

“Buyers in the market for manufactured homes, often referred to as mobile homes, can anticipate slightly higher interest rates because the mortgage industry regards them as slightly riskier credit candidates.”

“Those who place mobile homes on land they do not own, as often happens, obtain property loans with rates of more than 9 percent, said David Rand, a senior vice president of Origen Financial, based in Southfield, Mich., while those who want a conventional mortgage to buy a manufactured home with land typically pay 6.75 percent to 8 percent for loans of 20 to 30 years.”

Whatever type of home you decide to finance be sure that you go with a credible lender and understand your type of loan before you sign.

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