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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.
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.
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.
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.
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.
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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Quote:
Originally Posted by luv4horses
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
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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