Loans for Vacant Land Info
Posted on | June 13, 2008 | No Comments
I am working with several clients on vacant land deals right now. Something important to be aware of is that getting a lot loan is not nearly as easy as it once was. Most banks are requiring 20-25% down.
One of my sets of clients is a young couple who eventually want to live in the country. They own a home now, and know that the market isn’t terrific for selling. But, since it is terrific for buying, they would like to purchase their future home site now, and then sell their current home and build in a few years. They have good credit and good income, but not many thousands of dollars of extra cash on hand. Even at an 80K purchase price, most banks would require them to have around 20K down. That’s a lot of money. So, I called Katie Mahoney, with Carolina One Mortgage (the one who does the Mortgage Market Updates). They have a good lot program now in the sense that the rates are good, and for someone with plenty of money down, it probably is the best bet. However, it wouldn’t work for this couple. So, she referred me to Tidelands Bank, who still has a 100% lot loan program. Granted, it is for near-perfect credit, but I think we will definitely be able to put down way less than 25%, and they may even qualify for the 100%.
I really appreciated the fact that Katie cares enough for me and my clients to refer us to someone else if she doesn’t have a program that fits. Things like that make a person your true trusted lender, who you would go to over and over again, because there is a level of trust there that is hard to find. She also gave me a heads up that most lot loans nowadays are 3 or 5 year balloons, which means that the remainder of the balance of the loan is due in either three or five years. People usually re-finance these, but you have to be careful, because the possibility exists that the market or your situation has changed to a point where you are unable to qualify for a refinance.
If you are following the real estate market these days, or are considering buying, or have a home to sell, you will definitely notice that the mortgage industry is a major player. Having an agent with a thorough knowledge of the CURRENT state of the mortgage market is imperative. I capitalize CURRENT because it changes almost daily. This is very important, because it can and will make the difference between your being bale to achieve your real estate goals and not being able to. You need an agent with knowledge of the mortgage industry, and also one who has established relationships with trusted mortgage lenders, since they are the ones who really are the experts. For that matter, an agent with a whole team of industry professionals, such as inspectors, attorneys, contractors, and lenders is key to having a smooth and on-time transaction.
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