Best Land Loans

Land Loans VS Mortgage Loans

If you are a property developer, or in the construction business, you may be searching for a land loan in order to purchase the land you intend to develop.

You may not be ready to build at the moment, but the property might be in a location that is hot and rapidly selling out.  The most common type of land loans are for builders and developers who want to lock up that piece of property for future development, yet aren’t ready to begin construction at the moment.  They are not hard to find and land loan rates are often negotiable based on your company’s history and credit worthiness.

Often private individuals spot a piece of property where they would like to have a home built either now, or at some point in the future.  If there are currently no developments on the property, then a land loan would be the way to borrow money in order to purchase that property to be developed at a later date.  Land loans are available if the property is undeveloped.  If there is construction on the property you wouldn’t be looking at land loans, rather you would need to apply for a conventional mortgage loan.

There are times when communities grow at such a fast rate that developers plan shopping plazas or malls in order to grab a rapidly growing market area.  If the developer is not quite ready to build yet, but wants to snag that location, he would probably apply for one of many available commercial land loans.  At some future point when he is ready to build, he can then borrow money through construction loans to be used for the actual development of the property.

Land loans are an integral part of the development of any housing developments.  Builders begin with a land loan.  Once the land has been graded and readied to be built on he then acquires construction loans.  The land loan and the construction loan are then paid back in full upon sale of the property.  Land loans and construction loans are often short term loans.  They may come due at six or twelve month periods.  If the property hasn’t sold, land loans and construction loans are often renewable.

Sometimes several developers and construction companies develop a neighborhood.  If a builder only wants to develop a portion of the land in the development he usually applies for a type of land loan known as lot loans.  Because he is only going to build on a lot or perhaps a few lots in the development they are referred to as lot loans.

The basic difference between a mortgage loan and a land loan then is whether or not there is any construction on the land.  Mortgage loans are for properties that have been developed while land loans provide funds to purchase the land for future development.