Most people do not just outwardly purchase a new home. Sure if you are a multi-millionaire, you can afford to pay for your new home upfront. For most people however, they typically turn to banks for loans and mortgages to purchase their homes. The steps involved to qualify for a mortgage can sometime be difficult, and they are harder than ever. The housing market collapse that we saw a few years back was primarily due to banks giving out loans to consumers who could simply not afford to pay them back. So as of recently more banks and lenders are reluctant to give out mortgages, unless you are looking to buy a multi-million dollar home that is.
Recent data that has been collected from the Mortgage Bankers Association has shown that loans for houses ranging from $1 million to $5 million dollars are being given out more frequently than other loans. As the price of real estate is going back up, banks are more likely to give you a loan if you plan on buying a multi-million dollar house. You would think it’d be the opposite, but that simply is not the case. So why are banks and lenders doing this?
Well first of all, those that qualify for a loan that large pose less of a risk than others. If a bank is willing to give you a loan that large, it’s typically because you have a higher-paying job than others and that means there is a greater chance that you will be able to pay it off in a timely fashion. Additionally these larger loans are being used to purchase desirable homes in locations like San Francisco or New York City. With the real estate market on the rise again, homes in this area will only increase in value over the years. So if you are strong earner looking to buy a million dollar home in an extremely desirable location like San Francisco, you will most likely qualify for one of these larger loans.
Photo by Justin Sullivan/Getty Images
