Raw Land Loans
So you have found a block of land that would be perfect to build your dream home on, or maybe you just want to hold on to it as an investment. Now, you need to know what to do next. How can you take out land loans and what are the general requirements that will be asked of you? Well, as with almost anything in the money business, the rates and requirements will differ greatly depending on which financial institution you seek out for your loan. This article can act as a short guide on the usual requirements for loans for land, so of course you will still need to carefully read the contract, terms and conditions, and other documents that your provider gives you.
The first requirement that you will find on just about all land loans that are available at the moment is a deadline on how long you have before you must begin construction on your land. Generally, if you intend to start building within 12 months, then you may actually need a different type of loan, sometimes referred to as a construction loan, but the availability and terms of these loans vary greatly so that is just one more thing to ask your lender about or research online. For a regular land loan you will usually have somewhere between one to three years through which construction must begin on the land. Of course, once again, this time frame will vary from lender to lender depending on your negotiation.
There are also some other requirements which are very similar to any other type of loan. For example, most long term loans must be for a minimum of $20,000 and it is not uncommon for that minimum to be even higher than that. The standard term for land loans tends to be about 30 years at the moment, although this also varies between different financial institutions, and most will allow you to make extra payments so that you can pay off the loan at an earlier date. The opposite might also stand true if you have a solid credit history.
As you spend some time online researching all the available loans for land, you will most likely find that they are not so different to other types of loans that you may already be familiar with. You may even find that your current bank or other lender can offer you a good deal on a new loan so, as I mentioned earlier, all it takes is a little research and a few questions to the right people and you’ll be on your way.
My general golden rule when it comes to applying for any new land loan is that you should have a complete picture of your finances, so that you know what you can and cannot afford. Many great investors have had to turn down a great deal on a piece of land at one time or another due to the fact that it just wasn’t the right time to go for it. You have to remember that good deals will keep showing up, and that you don’t have to rush into anything if you are not certain that you can handle it at the time being. It’s better to pay off any previous land loans prior to applying for new ones instead of going all-in at once.
June 12th, 2011 at 7:35 pm
i am a veteran looking to purchase raw land to eventually build a house but need about 6-8 months before we would qualify for full construction loan. My credit is good and so is hers but we have a couple of fixes and need her income for debt to income ratios. We really want to get some property. Any ideas?
June 21st, 2011 at 11:33 pm
Hello Lovell,
One way to go at it is just listing your name on the application. You should look at veteran loans, since they offer a few incentives that may prove to be very useful for you.
Best of Luck,
Dave
June 27th, 2011 at 7:20 pm
Dave,
First off let me state that I am a complete newbie to this whole process. I am currently an active duty member in the Air Force and stationed in Georgia, and will probably be staying down here for the foreseeable future. That being said, my wife and I are looking at investing in some land in Montana upon which we look to build a house following my retirement from the military. Therefore, we would simply be land holders for the next 13 years, before we were ready to build, and even then it would just be a single private residence. What would be the best avenue to pursue a long term loan for a large piece of land, in this case, about 160 acres worth?
July 18th, 2011 at 5:05 pm
i have land to sell
July 21st, 2011 at 5:20 pm
I bought 30 for $70,000 last year in july and it appraised for $83,000. Payoff is $66,000. Me and my partner are splitting and she agreed to letting me take her off of the loan for $5,000. That would put my new loan at about $71,000. Unfortunately, she was in charge of paying bills and our joint account went negative several times in the past month. Today I turn in my app. To refinance and I am thinking I wont get it now. This is a one of a kind piece of property and i would do whatever i needed to keep it. Any ideas on what I could do, or the best place to look for a new loan?
July 24th, 2011 at 12:16 pm
Hi Dave,
My husband & I found a piece of property that has a 3 car garage on it and part of the 3 car garage has been turned into a living area, so you could actually live in it while you build. We probably won’t be ready to build for at least 3-12 months. What type of loan should we pursue if it has a building on it?
Thanks, Jan
September 14th, 2011 at 6:19 pm
i want loan on a land in Osmanabad …..kindly contact me….
September 23rd, 2011 at 6:14 pm
Hi , I would like to inquire about getting a loan from a bank for a piece of land ? What should i do ? I am asking you because I need the money urgently. Can you please advise me on what should i do ?
Thanks
October 12th, 2011 at 6:55 pm
Raymund and Kohan – Please give me a week or two so that I can find you a couple of lenders who can help. Where is the land you are interested in located Raymund?
Jan – There is a small chance that you can get approved for a mortgage due to the fact that there is an actual living space on the property. How big is the land and what is the asking price?
Tom – While I would need more information in order to be able to give you any sort of advise, I would say that it’s best to wait and see whether you get approved or not. There is a good chance that you will, so there is no reason to worry about it just yet.
Theresa – If you email me with more information, I may be able to connect you with some buyers.