Land Loans Advice & Tips
Learn more about Land Loans at this page.
Land loans are a loan that special made for borrower who intend to purchase a piece of land. But securing the loan is more complex than a mortgage loans. It is involved many paper works, checking process and it might be a risky business for lender.
These loans have higher interest than other mortgage loans. Normally when securing home loan, you may use the same house as collateral. However, this can't happen at loan for land. The most difficult land to get loan is the raw land, cause of no plan to build anythings. The interest will be more expensive to borrower.
Anyhow, there are some ways to cut short the loan process, here are some practical tips to secure the loan faster and alternative ways :-
1) First thing to consider when taking the loan is your credit score and history. Lenders will use your credit history to determine whether you are good or bad risk to them. A derogatory information such credit charge-offs, collection accounts in credit report will negatively affect your reputation to lender. Try to rebuilt your credit before meet with lenders.
2) Your down payment required by lender might be 20% or higher, all depend the land's value and what is the plan to develop on it. If you willing to place larger amount as down payment, you will likely to get approval from lender.
3) Lender will require your financial information and status during the application. Thus, get ready all relevant documents and information. If the information provided is accurate and in order will shorten the loan process. Discuss with lender about the options. They might suggest the best option to suit for your situation.
4) Seek for multiple lenders, don't be surprise that your application be denied. The important fact is find out the reasons being denied and overcome the reasons.
5) Contact the seller directly and inquire about the owner financing. Make monthly payments to landlord instead of paying lender. Of course, this is totally depend on seller, they might willing to help you if they are not in immediate need of money.
6) if the seller not agree on the owner financing, ask about the lease option. A lease with an option to purchase means that agree to lease the property for a predetermined amount of time and when that time is up, you will be given the option to purchase it. If seller agree, you will be able to save much down payment and improve credit rating.
For more information about other loans, please check out Various Loans Guide instead of Land Loans
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