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19 Mar

5 Considerations Before Buying a Rural Property

Mortgage Tips

Posted by: Kim Banting

For the past year, the number of people looking to buy homes outside of the city has skyrocketed. Many want more space and are looking to rural properties, so I wanted to pass along some information to you!

Before you dive into country living, there are a few things you should know:

Check The Zoning: When it comes to buying rural property, it is important to check how the property is zoned. This is vital as zoning will determine how you are able to use the land, as well as what types of buildings are allowed and where they can be located. Is the property zoned as “residential,” “agricultural” or perhaps “country residential”? Depending on the zoning, it could affect the lenders available to you and what you qualify for.

Property Boundaries: Once you have determined how a property is zoned, it is important to look at the land. Getting a survey early in the process will help you mark the exact boundaries of your property to avoid future disputes. This is also a good time to get an appraisal done on the land and its value.

Considering the Land and Your Mortgage: What many people don’t realize is that land has a drastic effect on qualifying for a mortgage and what you can borrow. In fact, most lenders will mortgage: 1 house, 1 outbuilding and up to 10 acres of land. If you have a second building or extra land that is being purchased, you will need to consider additional funding on top of your typical 5% down payment.

Water and Sewage: When it comes to rural living, many people draw water from private wells and utilize septic tanks for sewage. To ensure everything is safe and in working order, it is a good idea to have an inspection done on the septic tank and water quality as a condition on the purchase offer. Due to the nature of these properties, be advised that inspections may cost more than it would in the city, but it is important as lenders may request potability and flow tests.

Coverage Matters!: When it comes to rural properties, there are two types of insurance that you should consider: Home Insurance and Title Insurance. Home Insurance will protect you from any loss or damage to buildings on the property, whereas Title Insurance will cover you for unpredictable or undetectable issues that can affect rights of ownership such as errors in the survey, errors from the lawyer, encroachments, unregistered easements or other encumberances.

If you are still thinking about purchasing a home in a rural area, I would be happy to help you determine your options. I know several realtors who specialize in rural properties and I can also help ensure you understand any differences in the mortgage process and qualifying that come with rural purchases.