Standard Types Of Land Loans
So you want to buy a piece of land? If you want to buy raw land to build on later or just to speculate then read on. Obviously just like any loan if you have some down payment money it will be easier to get then if you do not.
Banks prefer to loan money to already finished property or to very well laid out plans. If you are buying raw land and have not done your homework then there is a good chance that you get denied. If on the other hand you have put together all the research and proposed it well then you will likely be given the loan. Banks like safety and if you can not show how your project is safe then they will likely deny your request.
In addition to the fact that it is raw land there are a lot of other variables. One of the bigger variables is what type of land it is. If it is farm land that has yet to be farmed then it is going to cost a lot more to finance then if it is an empty lot right next to a thriving development.
Some people pick land that does not even have utilities available to it. If that is the case then the bank might laugh at you. If on the other hand you have done your due diligence and figured out where the power and water is coming from you have a chance.
Make sure that if you are developing raw land you get a staked survey done and that you know for sure if you can get the required permits and utilities that you will need later down the road. If you have plans to immediately build on it you will have an easier time getting it then if you want the land for pure speculation.
When it comes to financing the project you may be amazed to learn that home equity loans are usually cheaper then a direct loan. Why is this? Mainly because you will work harder to keep your home than to keep an empty parcel of land. Remember that banks love certainty.
Land loans usually have a ten to fifteen year term. Homes have thirty years but you live in them and they are a finished product. Raw land is not so the bank will not take on the extra risk of sitting on it for thirty years.
Land held for investment purposes can usually help you come tax time. This is because the IRS lets you deduct the interest expense in most cases so the real rate is less then the nominal rate.
Banks prefer to loan money to already finished property or to very well laid out plans. If you are buying raw land and have not done your homework then there is a good chance that you get denied. If on the other hand you have put together all the research and proposed it well then you will likely be given the loan. Banks like safety and if you can not show how your project is safe then they will likely deny your request.
In addition to the fact that it is raw land there are a lot of other variables. One of the bigger variables is what type of land it is. If it is farm land that has yet to be farmed then it is going to cost a lot more to finance then if it is an empty lot right next to a thriving development.
Some people pick land that does not even have utilities available to it. If that is the case then the bank might laugh at you. If on the other hand you have done your due diligence and figured out where the power and water is coming from you have a chance.
Make sure that if you are developing raw land you get a staked survey done and that you know for sure if you can get the required permits and utilities that you will need later down the road. If you have plans to immediately build on it you will have an easier time getting it then if you want the land for pure speculation.
When it comes to financing the project you may be amazed to learn that home equity loans are usually cheaper then a direct loan. Why is this? Mainly because you will work harder to keep your home than to keep an empty parcel of land. Remember that banks love certainty.
Land loans usually have a ten to fifteen year term. Homes have thirty years but you live in them and they are a finished product. Raw land is not so the bank will not take on the extra risk of sitting on it for thirty years.
Land held for investment purposes can usually help you come tax time. This is because the IRS lets you deduct the interest expense in most cases so the real rate is less then the nominal rate.
About the Author:
Spencer can teach you the ins and outs of getting a bad credit home loan mortgage, home loans bad credit, and many other loans.
posted by Debt Consolidation Loan at
6:11 AM
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