You may need to purchase land, if you want to build a house from the scratch. For buying land, you may require a land loan. If you think that you can keep your home as collateral to get a land loan, then you are wrong.
Getting your land loan financed, can cause you a lot of hurdles. Here we are telling you a few factors to consider before you buy a land. Let us learn about some important tips to obtain a land loan.
Land Fundamentals: Boundaries, Zoning, Access
Paying attention to zoning, access, and boundaries are essential. Get land boundaries properly marked by land surveyors. Ensure that you get everything on paper to be presented before the lender. Double-check land-use and zoning restrictions. Blackhawk Bank is a reputed land mortgage bank that provides easy and quick loans with little documentation.
Planned Use of Land:
Getting a land loan is trickier than purchasing an existing house. This is because an existing house provides immediate and tangible collateral to the bank whereas fresh construction has a greater number of movable parts that can go skewed.
Land Loan Options
Another important thing that you need to consider is to find Financing to buy your loan. Given these problems, you would require to do an extensive search to finance the land purchase on adequate terms. You can try these below sources of financing:
This is a great financing method to get favorable terms, especially when the marketplace is cool and the seller is keen to unload the land. Seller financing is a form of an agreement between two private citizens.
Everything is negotiable right from the upfront payment to the rate of interest. It is very essential to get the papers checked by a lawyer prior to signing anything to prevent loopholes and disagreeable surprises for both the parties.
Credit unions and local banks
Local lenders generally look for more favorable land loans. They can even offer improved terms due to the good amount of local property knowledge they have. A potential borrower will require providing a loan suite with plans and specifications for the land, and personal monetary information to demonstrate creditworthiness.
It becomes difficult for buyers to buy land when the credit unions and banks don’t offer adequate financing. If the land is agricultural and rural, then the buyer may obtain national assistance. The USDA provides a wide variety of sponsored loans with nominal requirements and beneficial terms.
All these considerations before purchasing a land loan are important to make it a hassle-free process.