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Old 03-21-2021, 03:37 PM
 
Location: Florida & Arizona
5,938 posts, read 7,278,490 times
Reputation: 7544

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Looking to purchase land in an area that's developed, with utilities and such, but not planning on building for a couple of years at the earliest. I realize land loans can be tough to get, but does anyone out there have any suggestions for potential lenders and/or ways of financing the purchase? I would add that this is for a future retirement home, if it matters, meaning that it would not be our primary residence for probably 5-7 years.

I've got an excellent mortgage broker I've worked with for a number of years who I have reached out to but don't expect to hear back from for a day or so. I'm guessing he won't be able to help.

I won't qualify for any of the USDA rural loan programs because of income, even though the property is in an area where these are available. For that matter, income, credit and such are all very good, so that's no problem.

I'm looking at a piece of land that's around $180k and would like to put maybe 20% down. I don't have a problem with a short term loan, such as 10 years, for example. When we prepare t build I would expect to wrap it into a construction loan.

Thanks for any help/suggestions!

RM
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Old 03-21-2021, 03:58 PM
Status: "Made the Retirement Run in under 12 parsecs!!!" (set 13 days ago)
 
Location: Cary, NC
43,154 posts, read 76,719,434 times
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https://farmcredit.com/state/arizona

Maybe?
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Old 03-21-2021, 04:22 PM
 
Location: Rochester, WA
14,392 posts, read 11,898,496 times
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The only solution we found that is a good one have been private contracts with the seller of the property. Some sellers of land will accept a contract that will be paid off in five years with a refinance into a construction loan with a conventional lender.
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Old 03-21-2021, 04:47 PM
 
Location: Florida & Arizona
5,938 posts, read 7,278,490 times
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Quote:
Originally Posted by MikeJaquish View Post
Thanks, Mike! This looks like it's worth pursuing.

For what it's worth, the seller is a real estate agent who owned a number of adjacent parcels which he built homes on and sold. He's not interested in carrying the paper on this parcel, he's looking to get out - this is the last one.

RM
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Old 03-22-2021, 04:22 AM
 
8,548 posts, read 12,314,446 times
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If you have significant equity in your home you might look into doing a cash-out refinance or a HELOC.
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Old 03-22-2021, 04:24 AM
 
Location: Florida & Arizona
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Thanks for the suggestion. We have considered that but would prefer not to at this point.

RM
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Old 03-22-2021, 06:03 AM
 
Location: NC
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Normally a built, lived in house on the property signals that the lot has value that can be recaptured if the mortgager skips out on the loan. For undeveloped land there is nothing, particularly if it is not being used to create at least temporary value such as in farming. Even if you have really great credit 20% down is nothing. You need collateral. Or at the very least be able to convince a local lending bank of what a great deal it is for them to lend to you.
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Old 03-22-2021, 06:18 AM
 
Location: Bloomington IN
8,590 posts, read 12,268,869 times
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MortonR--based on many of your posts, is this land in Indiana? If so, reach out to IU Credit Union. You would have to become a member, but that simply means you open a savings account with a very small amount kept in it-$5.00 last time I checked. I'm not sure if they do lot loans right now, but it's worth asking. (edited--no lot loans with IU Credit Union) You might also reach out to German American Bank. State Bank of Lizton does lot loans. They operate primarily in Hendricks County. I don't know if they loan for properties outside of Hendricks.

Look for the regional and local places.
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Old 03-22-2021, 07:39 AM
 
8,548 posts, read 12,314,446 times
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Quote:
Originally Posted by luv4horses View Post
Normally a built, lived in house on the property signals that the lot has value that can be recaptured if the mortgager skips out on the loan. For undeveloped land there is nothing, particularly if it is not being used to create at least temporary value such as in farming. Even if you have really great credit 20% down is nothing. You need collateral. Or at the very least be able to convince a local lending bank of what a great deal it is for them to lend to you.
In and of itself, undeveloped land can have plenty of value that can serve as collateral. I think the reluctance of many lenders to offer loans on land is because housing is usually easier to sell than is land. There is a more limited market to buy undeveloped land. (I don't like saying "vacant" land because their is no such thing.)
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Old 03-22-2021, 07:46 AM
Status: "Made the Retirement Run in under 12 parsecs!!!" (set 13 days ago)
 
Location: Cary, NC
43,154 posts, read 76,719,434 times
Reputation: 45496
Quote:
Originally Posted by luv4horses View Post
Normally a built, lived in house on the property signals that the lot has value that can be recaptured if the mortgager skips out on the loan. For undeveloped land there is nothing, particularly if it is not being used to create at least temporary value such as in farming. Even if you have really great credit 20% down is nothing. You need collateral. Or at the very least be able to convince a local lending bank of what a great deal it is for them to lend to you.
Quote:
Originally Posted by jackmichigan View Post
In and of itself, undeveloped land can have plenty of value that can serve as collateral. I think the reluctance of many lenders to offer loans on land is because housing is usually easier to sell than is land. There is a more limited market to buy undeveloped land. (I don't like saying "vacant" land because their is no such thing.)
Land appraisal vagueness and variability deters high LTV lending on raw land. I agree with "vacant," but too lazy to spell out "undeveloped."
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