Land loans? How do they work?

[mla2177]

Hi1 There is a piece of property for sale in my area that I am interested in purchasing, but am not interested in building for a few years. Does anyone know how land loans work? Do they finance land only loans for 30 years?

 

[mla2177]

Anyone????

 

[ElizaB39]

I did a quick google search and came up with some ideas of amortized over 20 years but with anywhere from 5-10 year maturities. 80% loan to value rates.

 

[AUPr8Hd]

It will depend on the financial institution. For instance, a bank local to me has the following terms for their lot/land loans. These apply to properties being purchased for future intent of building ones personal residence.

3 years interest only @ Prime + 1%
or
5 year balloon note with payments amortized over 20 years @ Prime + 1% or 8.65% fixed

Typically, you will see a loan to value cap at 75% for these type properties. However, some institutions will go higher. I don't know of any that offer a 30 year amortization or repayment.

 

[iloveboardwalk]

Many lenders will not lend on property that does not have utilities on site. Also, most of them want at least 20% down. There are tons of different programs. Most small lots around here are purchased with cash because it is difficult to get financing for land for a private buyer.

Call a Realtor who specializes in land in your area. They should be able to give you some good tips, let you know what is "customary" in your area and also point you to some lenders.

Good luck.

 

[PryncessChrysty]

Bank of America is a great place to contact about doing lot loans. If you want more info (even if there isn't a branch near you), please feel free to PM me.