Residential Mortgage Lenders: What Factors Affect Good Location?

Residential mortgage lenders have to consider location when determining whether or not to mortgage a property because they risk losing money. This is true because homes in a poor location can depreciate and if borrowers choose to sell the home, the purchase price may not cover the mortgage. Here are some important factors that indicate a property is in a good location.


The value of a property in a location that is close to transportation, shopping areas and other public facilities such as the post office and bank is likely to be high and will increase over time.

Low Crime Rate

Areas in which less illegal activities are reported indicate that the neighborhood mainly consists of responsible citizens. This also indicates that a majority of the people in the area probably have jobs and the security of law enforcement is effective. Residential mortgage lenders should consider that communities with increasing crime rates can cause depreciation in property value over time, and that areas with lower crime rate can generally call for higher property bids.

Consistent Municipal Services

There should be regular garbage pick-up, clean streets and sewers, and a good police department.

Higher Priced Homes

Lender should know that even if the borrower is interested in a lower priced home, it will appreciate over time if in a location where the average home is priced higher. This increases the possibility of equity growth.

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