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Why Banks Consider Lots and Land Loans To Be Unconventional

It’s difficult for buyers to secure loans for lots and land than loans for building a home. Once you understand the factors that banks take into consideration when issuing this loans, you will understand the motive behind differential treatment. Borrowers today need to have a clear information to acquire these loans. This leads us to the need for various land and lot loan advisers who will connect you to the best financiers.

Why banks consider lots and land loan to be unconventional

So, what is the issue with loans for lots and land?

gfhgfhgfhgfhgfhgfhThe banking industry has yellow flagged lots and land loans.Most of the big banks operational today experienced serious losses relating to this type of loans. During the housing market collapse, the economic downtown witnessed made them shy away from the property markets. Several banks are still recovering from the losses experienced during that period. The present oversight regulations, market uncertainties, mandatory capital requirements and stringent underwriting procedures have affected their operations. With time the banks might ease their restrictions and restore the loans for lots and lands on their books.

Forms of collateral

Most lenders consider land as a risky form of collateral when they compare it to existing homes. If the property being issued is a vacant land without any assets or structures, it qualifies as the only on-site collateral. It is not easy to convert the land into a home. The residential mortgage is the best form of collateral for a good number of lenders. There is the argument that land loan borrowers are not incentivized to repay the loan as compared to someone residing in it. It’s hard for a borrower to default on a property if it’s their primary residence at stake.

The loans for lots and land are regarded as nonconforming or unconventional loans. The non-conforming loans are not liquid to the original lenders. They cannot be sold to other secondary loan market institutions.

Avoid foreclosures at any cost

Many consumers find it hard to believe that banks have no intention in foreclosing properties. Most banks make their profits by lending out money and not investing in real estate. This means that foreclosures are not a viable option to a loan. When the banks foreclose, their residential lending groups are tasked to manage and liquidate these built homes. This is the most common loan collateral.

The Real estate owned bank groups are aware that selling a parcel of land is different from selling a home. These real estate bank-owned groups are aware of the shortfalls of selling land, so they avoid it in their standard operations. Lenders do not have the appetite for many empty or vacant land properties acquired through foreclosures.

Lot and land loans are good for business

gfhgfhgfhgfhgfhThere are banks that have realized that this is the right time for loans for lots and land to thrive. From their perspective, lot loans are a suitable way to build their businesses. Lenders without active loan programs make exceptions to acquire and retain valued banking customers. The banks hope that their new customers will begin with a lot loan and later seek construction loans and long term financing in addition to other banking products.…

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Tips for applying for a payday loan

Payday loans are a contemporary form of credit facilities which are characterized by granting loans to individuals that are in urgent need of cash. Principally, the monies transmitted through these loans are payable as soon as the pay cheque arrives. In essence, therefore, the payday loans are issued to employed individuals that have a definite income. In order for one to qualify, he must show that the payments certain and within the confines stipulated in the terms of lending,

Payday loans are preferred because they are easy to apply, process and get approval. The application can be made on the online platform and in a prescribed manner. If you qualify as outlined in the requirements stipulated in the website, the loan will be processed and approved without many technical producers. 3 month payday loans are highly appealing to borrowers due to the simplicity in application and approval. Loan repayment is also transmitted through the same platform at the convenience of the borrower.

As much as the process is simple and straightforward, you must understand that multiple applications are sent in a day and therefore it is the responsibility of the borrower to ensure that he abides by basic regulations and applies certain tactics to enhance his chances above the other applicants.

These tactics are enlisted as follows;

Apply on weekdays

Essentially, all application can be made any day of the week through the lender’s website. However, it is highly recommended that you send out your applications early in the week and avoid doing so on the weekends. It is common knowledge that the loan will not be approved on the weekends. Similarly, experts have advised against applications on holidays based on the fact that banking institutions close their doors on holidays just as they do on weekends.

Make your applications in the morning

Processing and approval of a loan require passage of various departments, and therefore it is prudent that a borrower makes his request early in the day in order to guarantee such approval. Also, it is a known fact that business is more likely to be completed in the morning rather than in afternoons. Evening applications are known to fail in surpassing the cutoff period.

Attach references

The lack of references in a payday loan application is not circumstantial, but the addition could be advantageous. Undoubtedly, references will give you the edge over other applicants. It is important for any lender to ascertain the credit worthiness of a prospective borrower.

 

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