Best Land Loans

Land For Sale

Assuming that you have found some cheap land for sale, you either need to learn about land loans in order to actually purchase that piece of land, or you have already bought it and in that case you are looking for commercial or home construction loans to make something out of it. The idea here is that whenever you are involved with residential or commercial land for sale by owner, some kind of financing will eventually be needed, whether that comes in the form of land loan financing or construction loan financing. Before I go any further, I would like to start by saying that if you have some money saved up then it would be much wiser to use it as a down payment on any loans for land purchase instead of saving it for commercial or residential construction loans.

You see, with the possible exception of farm loans, whenever you are looking for vacant land for sale, you should know that land financing is difficult to get. The truth is that land sales have fallen due to the fact that bare land loans are not being approved as easily due to our economic crisis. As a buyer, you don’t only have to worry about land loan rates, but before you even get there, you have to find some land loan lenders that will actually negotiate with you. And that is true whether we are talking about farm or even hunting land for sale.

Then again, it is possible to get land financing and I am not referring solely to farm loans. I recently helped one of my readers find some land loans for a government land for sale in Washington State. Interestingly enough, since it was government land, we discovered that most lenders were more lenient to provide lot loans. Using a simple land loan calculator, we were able to narrow it down and we actually found two loans on land that would work for him. The only thing that was left is finding him one of those new construction loans, but after you have the land that is the easy part.

Of course, that’s not to say that you should only look for farm land for sale or government land for sale. You can get vacant land loans to buy land anywhere, and it doesn’t matter what kind of land that will be. All I am saying is that you should do your homework, so that you don’t get caught by surprise. Many people seem to think that the hardest part of the equation is finding some cheap land for sale by owner, and then convincing the owner to lower the price. Well, all I am saying is that you should think two steps ahead, or in other words, learn about raw land loans and, depending on your purpose, residential or commercial construction loans.

I could keep going forever, but I’ll stop here by saying that you should learn about land loans and figure out how to get a commercial or residential construction loan before you go on your search for cheap land for sale by owner!

Construction Loans

When you apply for land loans, commercial or residential construction loans, or any other loan for that purpose, the first thing that lenders consider is what your collateral will be. Whether you find some farm land for sale in Texas and you want it for development, or if you want to buy hunting land for lease in Alabama, you would need a raw land loan either way, and the unimproved land that you will buy will be your collateral. So, some would say that loans for land are actually secured loans. That, however, is not exactly the case for loans on land or construction loans.

When you get a construction loan, your collateral is whatever you are planning to build, and when you get a vacant land loan, that vacant land secures the loan. Even though both of those are effectively secured loans, the truth is that they are much less secured than home loans or any mortgage. Think about it. Let’s assume that you have found some cheap land for sale in Colorado, you found one of the best loans to buy it, yet you failed to make a few of your payments and your lender takes over the unimproved land. Let’s make the same assumptions, but instead of Colorado land for sale, you found an apartment in Colorado and got a home loan to buy it. Is it easier for the lender to make their money back on land loans or home loans? The answer is obviously the latter, whether we are talking for loans for land or construction loans, because of those don’t have a constructed property on them to be sold.

People are always looking for houses to buy in Colorado, or any other state, but you won’t find nearly as many people looking for Colorado land for sale. That is why land loans and construction loans may be harder to find and will require some additional research on your end. It is for that very same reason, that land loans rates are usually a little bit higher than those for home loans. Then again, that’s not to say that you cannot get a vacant land loan or even equity loans on land for that purpose.

There will always be lenders out there offering land mortgage loans and residential construction loans, but they just won’t be as easy to find as those who offer home loans, due to what we discussed above.  I would recommend that if you are trying to get approved for construction loans or land loans, you take the time to make a good business plan with a clear time line about what you plan to do with the land that you want to buy. Just the other day, I was presented with a development plan, as part of an application for loans for land from a person who managed to get a good price on some Texas land for sale. He had presented us with all the costs that where involved with construction and how he was planning to make his money back within a reasonable amount of time. Based on my experience, I would say that this person would get approved for any land loans. He had conducted a lot of research, secured a good price for the land, and had a clear cut plan for the repayment of the loan. That’s all you need to do as well if you are applying for commercial or residential construction loans and land loans.