Question about mortgage and buying a lot across the street (for sale, 2014)

[ddm2k]

Bought a home in 3/2014 love the house, love the area. A single eyesore single wide trailer was directly across the street. As of this month, the trailer is being torn down and the land was put up for sale.

I currently have a mortgage on my property. Is it possible to purchase the land and refinance both my existing dwelling and parcel, along with the parcel across the street, in a single mortgage? Address numbers are consecutive, we'll say I'm 1000, and property across the street is 1001.

[HatchChile]

Hopefully, the realtors on this forum will chime in.... but as far as I know land loans work differently. Getting a mortgage on a land might be hard, or perhaps even impossible? The interest rates on such loans are also pretty high and the down payment will be too.

Another option is to get a home equity loan to finance your land purchase...but, again, that seems pretty risky to me? If the land was adjacent to your plot, I can see that adding something to the resale value. But, it's across from your property. Who would be attracted to something like that when you decide to sell it in the future? A polygamist? Jk...

[ddm2k]

Originally Posted by HatchChile

Hopefully, the realtors on this forum will chime in.... but as far as I know land loans work differently. Getting a mortgage on a land might be hard, or perhaps even impossible? The interest rates on such loans are also pretty high and the down payment will be too.

Another option is to get a home equity loan to finance your land purchase...but, again, that seems pretty risky to me? If the land was adjacent to your plot, I can see that adding something to the resale value. But, it's across from your property. Who would be attracted to something like that when you decide to sell it in the future? A polygamist? Jk...

I feel the same way. I had an inkling that getting a raw land loan with no plans for a house would require something ridiculous like 30-50% down. You might as well buy it outright. If my proposed idea was doable, it would technically have a dwelling in the package - it would just be across the street. In my area, you cannot combine lots once they are divided, but that hasn't prevented people from having a single mortgage for a dwelling with an address that contains two adjacent lots, at least not on the same side of the street.

Since the lot is 10+ acres and "rural enough" to qualify for USDA financing, I wonder if Carolina Farm Credit would take interest in such a deal. But like you, I am eager to hear from some NC realtors who may already have an answer.

[Edward Teach]

No, a lender won't do exactly what you're looking to do. A lender *might* give you a mortgage on the vacant lot, if you have a suitable downpayment, can show enough income to adequately pay the new mortgage (in addition to the existing mortgage, other debts, living expenses, etc.) and provide a plausible explanation of why you want the lot, what you intend to do with it, what your exit strategy is, etc.

[BoBromhal]

details - like the fact it's 10 acres - are important; more details = more accurate answer.

The simplest thing is to cash out refi on your personal home to buy the land. That of course depends on your value, the cost of the land, your ability to service the (presumably) higher mortgage.

[ddm2k]

Originally Posted by BoBromhal

details - like the fact it's 10 acres - are important; more details = more accurate answer.

The simplest thing is to cash out refi on your personal home to buy the land. That of course depends on your value, the cost of the land, your ability to service the (presumably) higher mortgage.

I did not think of this. That's an idea!

[MikeJaquish]

You will be more likely to get a land loan from a community bank than a lender who sells their loans.
It will be a portfolio loan.
Yes, in comparison to a home mortgage, the LTV and interest rate will be more stringent.


If you are in a rural area, you might check with Carolina Farm Credit. https://carolinafarmcredit.com/
They live to loan on land.
I mght avoid the cash out refi on your primary home, and go with a HELOC to get cash for the land.
Easier to sell the lot when you can use the proceeds to pay off the second loan.

[sdl681]

I would do a HELOC over the cash-out refinance. I have found that the HELOCs have more flexibility than the cash out refinances, especially down the road if you need emergency money. I had shorter turn around times on my HELOCs vs CashOuts.