U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > U.S. Forums > Maine
 [Register]
Please register to participate in our discussions with 1.5 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Jump to a detailed profile or search
site with Google Custom Search

Search Forums  (Advanced)
Business Search - 14 Million verified businesses
Search for:  near: 
 
 
Old 02-04-2010, 06:11 AM
 
20 posts, read 63,185 times
Reputation: 16
Default typical rates and conditions for a land loan

how hard is it to get a land only loan in central maine?

would the rates be comparable to a regular home mortgage?

would it be better to get owner financing?

i would prefer a longer loan term to keep the monthly payments down, and it seems owners don't usually go for anything longer than a 15 year term
Quick reply to this message

 
Old 02-04-2010, 06:55 AM
 
Location: North of Boston
1,365 posts, read 1,885,591 times
Reputation: 756
Your best bet is to find a local bank to work with.

If you plan to just buy the land and hold it for a while then expect to put 30% down and pay 1% higher than a typical house mortgage.

If you are planning to build on the land soon then you will get a construction loan to pay for the land and the house construction. These loans are typically interest only for the period of construction (generally no more than a year) and then the loan will typically convert to a traditional fixed rate or adjustable mortgage when construction is complete. The amount of the loan is based on the estimated future value of the constructed home and banks typically want at least 20-30% down in these situations.
Quick reply to this message
 
Old 02-04-2010, 07:25 AM
 
Location: Northern Maine
5,990 posts, read 7,380,891 times
Reputation: 3882
Banks usually want 50% down on a land loan and they want to see a building started within six months. Here's why; Very often, more than half the value of the purchase price is in the trees. The buyer could walk away and abandon the property after cutting the trees. The bank is left holding the bag. It's a rare bank that will loan money on land at all. They have been down this road. These facts are based on wooded lots. A lot in a residential subdivision is another matter.

Some commercial banks loan money on wooded lots. Recent interest rates run as low as 8%, but more often they run 10 to 12%. This is why many land buyers take out home equity loans. The interest paid is tax deductible and if the buyer builds a camp the following year he can roll the whole deal into a mortgage. Home mortgages are at 5% now. I have never seen a land loan at 6%.

Owner financing usually takes 20% down, sometimes more. There will be a provision in the mortgage that any proceeds from a timber harvest goes to the seller to pay down the principal. This would not apply to cutting wood for your own use such as building a road into the property, firewood, fencing or building a pole barn.
Quick reply to this message
 
Old 02-04-2010, 10:22 AM
 
520 posts, read 486,812 times
Reputation: 578
To answer your questions (it sounds like a houselot rather than timberland):
1.) It ain't easy if you don't have a relationship with the bank, have perfect credit, or tons of money. Sure, they'll lend you money if you deposit a like amount in their bank.
2.) No. The risk that a borrower might abandon a piece of land as compared to their primary residence, dictates a considerably higher interest rate and much poorer terms. It's all about risk.
3.) Yes.
4.) It's all a negotiation. You make an offer, the seller can accept, reject or counter-offer. Silence indicates rejection. And most sellers are aware of the problem with obtaining land loans. Anything beyond "I give you cash, you give me the property" is a negotiation.

We got 20% down on a land loan from Bangor Savings bank, 7.5% fixed, 30 year term, 7 years to when the rate can "adjust" annually. This was in . . . 2007 I think. But I talked them into a "blanket" that took in property in both Hancock Penobscot Counties, including a home, so the terms don't really apply when everything was finalized. I believe they'd go 20% down, 20 years, ALWAYS with a balloon or adjustment 7 years or so down the road. But it also depends on who you are and how they view their risk. As I recall, Machias Savings Bank did better on the first offer.
Quick reply to this message
 
Old 02-04-2010, 11:35 AM
 
Location: WV and Eastport, ME
6,168 posts, read 4,698,086 times
Reputation: 3540
When we bought land in Maine, the Real Estate Broker told us that most land sales are not financed through a bank, but are cash sales.
Quick reply to this message
 
Old 02-04-2010, 12:05 PM
 
Location: Gorham, Maine
1,637 posts, read 2,474,421 times
Reputation: 1072
I haven't done many with clients, but all of mine have been cash sales.
Quick reply to this message
 
Old 02-04-2010, 12:05 PM
 
Location: The Woods
14,237 posts, read 12,582,051 times
Reputation: 5772
Land loans are hard to get anywhere. You'd be better off with owner financing if you don't have a lot of cash to put down (with owner financing always be a bit cautious and do your homework).
Quick reply to this message
 
Old 02-04-2010, 02:06 PM
 
Location: 3.5 sq mile island ant nest next to Canada
2,883 posts, read 2,926,204 times
Reputation: 1777
All good info that I didn't know. Hadn't really thought about it. Have to inform DD and SIL. They plan to pick up some land.
Quick reply to this message
 
Old 02-04-2010, 03:36 PM
 
Location: North of Boston
1,365 posts, read 1,885,591 times
Reputation: 756
Quote:
Originally Posted by arctichomesteader View Post
Land loans are hard to get anywhere.

If you have a steady income, good credit and 30% down, that is not a true statment at all.
Quick reply to this message
 
Old 02-04-2010, 04:32 PM
 
Location: The Woods
14,237 posts, read 12,582,051 times
Reputation: 5772
Quote:
Originally Posted by gf2020 View Post
If you have a steady income, good credit and 30% down, that is not a true statment at all.
Banks don't like to loan on land, particularly rural land.
Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


 
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Options
X
Data:
Loading data...
Based on 2000-2011 data
Loading data...

123
Hide US histogram

Over $79,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > U.S. Forums > Maine
Similar Threads
View detailed profiles of:

All times are GMT -6.

2005-2014, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25 - Top