The geographic trade area in which a bank will lend is usually defined as the trade area from which a high percentage, such as 75 or 80 percent, of their loan and deposit business takes place.
When the bank or lender defines it's trade area the lender will attempt to include all of the applicable levels of income and property eligible for servicing.
If a lender lends outside of their trade area these "out-of-territory" loans carry higher risks than do the loans that hit closer to home. and it would seem that the obvious reason for this is the problem of being able to service the loans properly because of the distance involved with a loan that's outside of the circle.
I guess you can say that the bank wants to keep a close eye on it's money. Understandable !
In some cases, though, these outside loans will be made because of investment fiancing needs.
Check with your lender to see what their guidelines are.
Any thoughts ?
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