How Does a Home’s Location Affect Getting a Loan?

How Does a Home's Location Affect Getting a Loan - The Tuttle Group

As you’re exploring the options for a home loan, you are also looking at many other factors. For example, as you are checking out different communities, the topic of crime comes into consideration. Understanding how crimes affect the process is necessary.

Crime Statistics
When you see areas with higher incidence rates, you might immediately turn away from them. Before you take this step, however, research the type of problems that occur. For example, you may notice that the rates are the highest near a major intersection. These heightened rates could have to do with traffic accidents, not property destruction or violent episodes. While you may not want to purchase a house on the main road, a neighborhood a few blocks away from the traffic is not necessarily unsafe.

Crimes and School Districts
If the number of crimes committed in an area is high, then the school district likely has some problems too. Rates of crimes and school district rankings tend to coincide with one another. A neighborhood filled with crimes might encourage young people to drop out of school. Also, areas that have trouble with crimes often see gang violence and heavy drug usage in their high schools. The crimes in the neighborhood can influence the young people in a negative way.

Crimes and Property Values
The value of a particular house does depend upon what the house is like, both internally and externally. Newer and larger homes tend to have higher price tags attached to them. However, the area also affects the price. If you see a neighborhood with high rates of crimes and schools that do not perform well, then the value of the properties is likely to be low. You may wonder why such a large house is available at such a low price. By investigating how many crimes happen and school performance levels, you can find your answer.

Crime and Your Loan Approval
Getting approved for a home loan is a necessary part of the process. You will get approved for a certain amount of money, not a particular area. However, the amount of a loan that you receive approval for may preclude you from living in some communities because you cannot afford them. When you are approved for loans of only a small amount, then you may only have enough money to purchase homes that are in areas with at least moderate amounts of crimes.

The Decision
Ultimately, you have to choose if you are willing to live in a neighborhood with moderate to high levels of crimes to afford the house of your dreams. Remember, however, that you cannot change location. You may want to choose a smaller home. You can also look at the trend of crimes in the area. If the rate has gone down in recent years, then the community might be headed toward a recovery instead of a further decline.

The location of the house won’t change what amount of money you are approved for. However, the amount of loan you are approved for might change where you want to live.

Stay In The Know

Stay up to date on what you need to know about market changes and how that impacts a home mortgage.