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Why are Construction Loans in Tennessee Hard to Get

Why are Construction Loans in Tennessee Hard to Get

When people moving to Tennessee are looking for a home, it\'s not uncommon for those people to have difficulty finding a home that meets their specific needs and desires. While there are plenty of homes to choose from and many people find the right fit in a new or existing home, some people consider constructing a custom home that is more in line with what they want or need.

In these cases, these people will be looking for Tennessee construction loans rather than a typical home mortgage. While this sounds nice, the reality is that a construction loan is a very difficult thing to come by these days. While it\'s not impossible, it\'s by no stretch the imagination an easy thing to get.

The fact is that construction loans are just one type of loan out of the many that are becoming more difficult to acquire. There are a few reasons why these loans as well as your typical home mortgage are more difficult to get approval for these days.

The first reason is that banks and other lending institutions have really taken it on the chin as it relates to the housing downturn. Many of these banks have been saddled with properties where the owners are in default. The inventory of foreclosed homes are so high that it will likely take many years to process all the foreclosures and potential foreclosure properties that banks have on the books.

Another reason why new construction loans tennessee are difficult is because of the risk involved. With a home mortgage, a bank can actually take possession of the existing home should the owner default. This gives them some opportunity either recoup their money or possibly turn a profit.

With residential construction loans Tennessee, if the borrower defaults on the loan, the bank may not even be able to take possession of an actual home. The home may be in various stages of construction when the borrower defaults which complicates the matter of what to do with the property. This increases the risk and makes construction loans very difficult to qualify for.

Once again, it\'s not impossible to get construction loans these days but it is difficult. You\'ll need to have the right qualifications and prove to the bank that you are a worthwhile risk for the construction loan you\'re applying for.