Why do you think you can get a tougher loan? I recently had a client get turned down for a home loan in Farmington Hills. They were self employed and did not have enough income to qualify for the $600,000 home. It would take years for them to qualify if they ever could. So what do they do?
They went out and bought a vacant lot cash. Here comes the problems. Nothing has changed in getting a loan. In fact they have made it harder on themselves. You see getting a construction loan in this 2010 Metro Detroit real estate market is very tough. They couldn't debt ratio with an ordinary loan and construction loan standards are tougher. So they are going to get denied there too.
These potential home builders are in for a rude surprise. Now they didn't listen to me that this may not be the time to build a house. And that most vacant lots are still over priced. So now my clients own a lot that was overpriced and that they won't be able to get a construction loan on. I never understand why some clients don't listen.
Somehow they have it in their head that they can build it cheaper than they can buy it. They have never built a house before. Unfortunately this is a case of wanting to live in a particular subdivision and wanting instant gratification. So now they own a lot they won't be able to build on for quite a few years.
So the moral of this story is: In 2010 many vacant lots are overpriced, and construction loans are still harder to get than a regular loan. And if you have been turned down for a loan the only way you are going to get approved is to find out the reason why you were denied. Then you have to resolve the issues whether you have too much debt, or buying too big of a house, or have bad credit. You may have to make some adjustments to what you want. You can't bamboozle the banks anymore.
If you get turned down, it is not going to magically disappear. So don't go and buy something that will get you in more trouble. These clients now own a lot they can't build on for years to come. A lot they probably could get cheaper next year. Doesn't make any sense does it?
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My Month of December quote:
~ Mark Twain”
Russ Ravary
"helping make your move easier"
your local Metro Detroit Realtor helping clients like you sell and buy homes through out the entire Metro Detroit suburbs. I love showing and selling Oakland County and Livingston County Lake front homes too.
AAAHHHHH!! Doesn't this just make you want to scream!? Now they are going to try to get a construction loan? They are in for a rude awakening. Very unfortunate.