Best Land Loans

Loans For Land

You’ve seen the parcel of land every day for years as you drive to and from work. Now it’s for sale, and you know that you can put it to good use. Maybe the parcel of land will make a great location for your dream house. Maybe it’ll be the perfect site for your new business venture. Maybe you just want to purchase the land so that no one else will build anything on it. Whatever your reasons for wanting this plot of land, the odds are good that you’ll need a land loan to buy it. So, what’s so special about land loans?

A land loan is similar to a standard mortgage loan that most people rely on to buy their homes. However, there are some key differences between the products.

For one, lenders usually require a larger down payment for land loans – or other loans used to purchase land. The reason for this is simple: Lenders view land loans as being riskier than loans used to purchase businesses or residential properties. That’s because it’s far easier for buyers to walk away from land without paying their bills.

That’s why the industry standard for land loans is a down payment of 20 percent. For comparison’s sake, most lenders only require down payments of 5 percent for borrowers with good credit who are applying for residential mortgage loans.

Lenders are also more cautious when giving out land loans. Again, this is because these loans are considered riskier. Lenders want to see a return on their investment. They want assurances that the buyers to whom they are lending money will eventually pay them back.

Because of this, lenders will be interested in learning what you plan to do with the vacant land you’re purchasing with their land loans. They’ll feel more comfortable if you plan to fill the land with an income-generating business. Again, this gives lenders more assurance that you’ll actually be able to pay back your loan.

Many buyers will want to use their new land purchase as passive open space. Others may want to leave it as an activity ground for their horses. If this is your desire, you’ll have to somehow assure your mortgage lender that you won’t default on the land loan. You can do this by disclosing your annual income level and by boasting a strong credit history.

In other ways, taking out a land loan is much like taking out any other mortgage loan. Lenders will be more willing to work with you if you have a steady, solid annual income. They’ll be more willing to lend you money if you have a good credit score. And they’ll be less likely to deny you if your level of revolving debt isn’t too high.

Taking out a land loan is far from an impossible task. But it will require you to jump through certain hoops. Just be patient and honest, and always make sure that potential lenders know that you are not a risky borrower.

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.

House On Land

Mortgage loan modification enables you to make regular payments for your mortgage. More and more lenders are acknowledging the benefits of loan modification. When you opt for loan modification, you are requesting your lender to change the existing terms of your mortgage. Loan modification can bail you out if you are unable to make payments on time.

There are 3 ways your lender can help you out if you happen to qualify for mortgage loan modification. Your lender either reduces the existing interest rate or reduces the principal balance of your mortgage loan. He can also increase the duration of the loan.

How does mortgage loan modification work?

The first thing you do is contact the loss mitigation department of your lending institution. You apply for loan modification. You are also required to furnish few documents relevant to the loan modification process.

Documents required for mortgage loan modification

You will be requiring the following documents while applying for mortgage loan modification.

* Documentary evidence of your financial hardship
* Bank statements
* Documents for income verification that may include your pay stubs
* Tax returns
* Document showing the current value of your property
* Homeowner insurance documents

Qualifying for the mortgage loan modification process is very crucial. And you need to keep in mind the following aspects-

* If you are the primary loan holder, you should not have filed bankruptcy earlier
* Your home has to be your primary residence
* You must have fallen behind on payments for at least 3 months
* You availed mortgage loan not after January 1st 2008.

President Obama introduced the Make Home Affordable Plan to bailout homeowners and land loan holders in order to prevent their property from foreclosure. The plan aimed at helping approximately 4 million to 5 million homeowners. However, not all homeowners qualified for the program. And this bailout program helped homeowners with first mortgage. It didn’t benefit homeowners with second mortgages. There was another drawback of the mortgage bailout plan. It failed to address the needs of homeowners who had negative equity in their property.