Anyone know about getting a loan for residential land. Not a construction ;loan. Are they harder to get and do you have to have good credit. Alos what terms are normal as far as years, etc? Kara
Land Loans? karak | Anyone know about getting a loan for residential land. Not a construction ;loan. Are they harder to get and do you have to have good credit. Alos what terms are normal as far as years, etc? =============================== Banks don't lend on raw land.
Banks will make land loans if you're in a defined residential area. If you go way out in the sticks where there is no present development and no hope of any for the foreseeable future then, you got problems. But, if you're talking land with development all around you then yes, your bank will more than likely loan you money. On a raw land deal, they'll probably want 20% down and you can get 12-15 years amortized payment schedules. As to rates, if you have good credit you'll be able to do something 8.5%-9.5% area. Shakey credit and, the price goes up. One hint. When you talk to the bank be sure you know the realistic apprasial value . The loan terms will likely be financing of up to 80% of the apprasial value or selling price-whichever is less.
I'm not sure how much it varys by state. In Ohio, I financed 6.5 acres last year to build a home on. It's pretty much in the sticks but only about 40 miles east of Cleveland. The bank gave me a few choices, I went with a 5 year loan (1st year fixed, the rest variable) amortized over 30 years, balloon payment at the end. I had to put 20% down. My middle score was a 660 and my wifes was in the 700's. I can't remember the exact interest rate, I do remember it was about a point above a normal home mortgage. This loan really doesn't purchase the property as much as holds it until your ready to build. Then you roll the balloon into a construction loan when your ready to build.
Usually you will be able to borrow up to 80% on a land only purchase. Most lenders will expect that you are purchasing for the purpose of building on the land. You will generally be limited to a 15 year term with a balloon after 3 years. They are harder to get as many lenders don't do them seperately. Hope this helps fla-tan
