Talking About Loans and Financing

Understanding The Key Differences Between Section 184 And Traditional Home Loans

There are several key differences between traditional home loans and Section 184 loans. Understanding these differences is an important part of determining which type of loan is best suited to your financing needs when purchasing a home. Continue reading to learn more about a few of the key differences.

Who Qualifies

One of the most substantial differences between Section 184 loans and traditional home loans is who qualifies to receive funding under each financing option. Traditional home loans are available to anyone who meets the lender's financial requirements. Section 184 loans on the other hand are only available to members of either Native American or Alaskan tribes and their families. 

Mortgage Terms

Another key difference between these two types of home loans is the terms of the mortgage itself. While traditional loans work by mortgaging the land a home is built on, as well as the structure itself, this is not possible when purchasing a home on tribal land. This is because individuals who purchase homes on tribal land do not actually own the land that the home is built on. Instead, this land is kept in trust for the tribe and the tribal members. That is one of the primary reasons why most traditional lenders will not approve financing for homes that are located on tribal land. Section 184 loan lenders are different. These lenders offer mortgage products that attach solely to the home itself rather than to the land it is built on. This allows tribal members to purchase homes both on or off the reservation. 

Loan Flexibility

Traditional home loans do not offer much in the way of flexibility. In most cases, these loans will only be made available for the sole purpose of purchasing a particular property. Section 184 loans, on the other hand, typically offer far more flexibility. In addition to purchasing a home, these loans can also be used to refinance your existing home or to make home improvements. You can also use the proceeds from a Section 184 loan to make necessary repairs to your home or other structures on your property.

Contacting A Lender

At this point, you probably have a relatively good idea of which type of loan is best suited to your needs. However, determining whether or not you qualify for the type of loan you desire is a decision that will ultimately need to be made by the lender you wish to work with. To get this process started, and to explore all of your financing options, be sure to reach out to a Section 184 loan lender in your area as soon as possible.  


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