Why Is Financing An Earth Shelter Home Difficult?

It’s difficult to obtain financing for the many types of Earth Shelter homes today. Most mortgage lenders will not approve you for these types of homes because there are few (if any) comparable sales in the area. In other words, lenders have no way to determine the value of earth sheltered homes. To buy or refinance an Earth Sheltered house, many people must pay cash. What if you can’t afford to deplete your savings?  At HomePromise we have good news!  We offer Earth Shelter Home loans.

This type of home makes the most of natural light with windows and doors often facing south creating a type of passive solar heating in the winter making them extremely energy efficient. Earth shelter homes are built to withstand even the harshest of weather conditions. These types of homes also sometimes use natural and upcycled material making them environmentally friendly.  They are also very disaster resistant.

A unique feature to this style of homes is that many of them are constructed with earth covering the roof.  Sometimes called “living roofs”, they are an attractive feature as they reduce heating and cooling costs year-round. Many homeowners find them an attractive home option in their efforts for improved environmental sustainability.

But, most lenders won’t approve Earth Shelter, Earthship, Dome, Grain Silo, Berm, orLog Home loans because of problems in getting appraisals. A lack of similar homes in the area makes the appraisal process difficult. Lenders feel comfortable lending when an appraiser finds three comparable homes nearby that have sold in the last 12 months. The problem is that finding three or more Earth Shelter style homes in the same area is nearly impossible. Even with their unique home designs on the rise and great benefits like energy efficiency, it is unlikely for any appraiser, in any state, to find an Earth Sheler home nearby.

For those looking to purchase or refinance these kinds of energy-efficient homes, there are unique challenges with finding a mortgage lender. You might have great credit and a great job but still get turned down for a mortgage. If this sounds familiar, then you need creative Earth Shelter home financing with HomePromise.

Why Lenders Deny Financing For Earth Shelter Homes

Beyond the comparable sales issue, another problem lenders face is the fear that unique homes like Earth Shelters will not sell. Most lenders get nervous when thinking about a possible foreclosure on a unique home if you ever stopped making your payments. This is called a “marketability” problem. Selling a home fast is important to keeping foreclosure costs for a lender to a minimum.

An Alternative Approach To Financing

If you want to buy or refinance a unique home like an Earth Shelter, you’re probably going to be denied by most lenders, but don’t give up.  It is possible to finance your energy-efficient dream home with HomePromise!

You can apply with your bank or credit union for help but most likely they won’t fund a mortgage for unique homes, for the reasons already mentioned above. If they do provide mortgages for unique homes, the interest rate will usually be higher and the mortgage will have an adjustable rate which runs the risk of a higher payment in the future.

Problems With Hard Money Lending

“Hard Money” lending is another option you can try.  A Hard Money lender is a non-bank mortgage lender that can approve loans on unique properties. The problem with Hard Money lenders is that their interest rates are even higher than banks and credit unions, sometimes by a lot! Plus, you need to watch out for the fine print buried in dozens of pages of mortgage documents. Hard Money lenders are notorious for non-standard mortgage documents that can trap you in a mortgage that will not be affordable for the long term. The fine print may include a balloon payment, which means that the entire mortgage balance has to be paid off within just a few years after you get the loan.

Creative Financing With HomePromise Corporation

To sum up, most lenders will always be nervous about Earth Shelter home lending because they are unique homes.  But, lenders like HomePromise will look at creative ways to ensure you get the mortgage you need to buy or refinance the Earth Shelter, Earthship, Dome, Grain Silo, Berm, or Log Home of your dreams – and you can be confident the mortgage you get won’t hurt you in the long run.

Apply For Financing

Getting approved for unique home financing is difficult. It doesn’t have to be. Because your dream home is unique, approval will require some creativity. We are here to help you, please call today at 800-720-0250.