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LOANS FOR APARTMENT

The ultimate dream for most Americans is to own their own homes. This has been made possible by lenders offering apartment loans.  These said homes may come in the form of townhouses, apartments or condominiums.

Traditionally, banks and mortgage companies have been the primary sources of credit for home buyers. However, other nontraditional lenders also offer credit.

Applying does NOT affect

your FICO® credit score!


Getting Loans from Banks

The process of acquiring financing through the bank for an apartment loan is similar to that used for a detached single-family unit. Approval is pegged on FICO credit score which must be near perfect or at least above 650.


Peer Lending

Peer to peer lenders usually carries out more intrusive credit checks in their approval process. However, they mostly favor veterans, families that have persons with disabilities, or people recovering from disasters. These applicants get both their sympathy and cash.


Online Lenders

Online application response is registered within 24 hours but, for approvals, their financial profile checks go beyond the FICO credit score.

Here at Nation 21, we’ll help you get the best online lenders who match your profile.


Conditions for getting an apartment loan

  • Size limit

The minimum size a lender will consider for financing is 40 by 45 square feet excluding the balcony and car parking space, the reasoning is that studio apartments do not have a good resale market in case you default on the payments and the lenders are forced to sell to recoup cash loaned.

  • Bedroom requirement

The apartment should have a bedroom that is separate from the living room to be considered for financing. Therefore, studio homes are automatically disqualified.

  • Deposit requirement

To qualify for this type of loan, you must have a loan-to-value deposit of at least 10% for big apartment approval and 20% when the apartment is less than 40 square meters. The lender will finance up to 80% of the balance.

  • Limit to exposure

Once a particular lender has funded a certain percentage of the purchase, they may refuse to offer more loans on the same apartment complex thereby minimizing their risk in case of mass defaulter rate.

  • Property use

If the apartment that is up for loan consideration is a residential property, but it also happens to be part of a resort, or a hotel complex, lenders are inclined to refuse to finance.

Applying does NOT affect

your FICO® credit score!


How to get approval

Save: When you are considering an apartment purchase, put aside a decent deposit, the larger the saving the higher your chances of approval, up to 20% of the value is a good place to start.

Do your research: Future resale potential is a major selling point when lenders are approving apartment loans, so if you are a first-time buyer, do your research and consider the location of the apartment you plan on buying with this in mind.

Seek help: Getting approval for this type of loan is an uphill task especially if your credit score has blemishes from the past. Alternatively, getting a co-signer with better credit will ensure approval. However, this has its own risks which you need to weigh before you sign on the dotted lines.

Check your credit: If your credit history is dotted with missed and late repayment of loans and credit cards, thereby blemishing a near-perfect credit score, work at improving this before you approach a lender for loan approval to avoid disappointments.


Advantages

Cheaper: Apartments are cheaper to purchase than other larger units; therefore, they are within reach for most buyers.

Close to the city: Transport cost is minimized since most apartments are in the inner cities, close to work as well as most entertainment spots.

High rental yield: In case you decide to turn your apartment home into a rental, it has the potential to yield a substantial rental income.


Disadvantages

  • Lenders limit the amount you can borrow; therefore it might take longer to achieve that dream.
  • Apartments have limited capital growth in the long run.

Conclusion

All things considered, owning a home even in the form of an apartment is a goal worth pursuing, and here at Nation 21 we are more than committed to see this happen when you approach us.

Applying does NOT affect

your FICO® credit score!


Do you have any further questions?