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Old 05-23-2012, 10:01 AM
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Default loan for undeveloped land



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So I've been looking around and it seems like 40 acres or so will run about 120k or so where i want the land. I talked to my bank and they are basically telling me that they will not loan any money on undeveloped land. Any ideas where I can go to get financed for something like this? I have 30% down, perfect credit history etc...

Thanks!

V
Old 05-23-2012, 10:04 AM
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You need to go to a different bank.

Quote:
Originally Posted by voland View Post
So I've been looking around and it seems like 40 acres or so will run about 120k or so where i want the land. I talked to my bank and they are basically telling me that they will not loan any money on undeveloped land. Any ideas where I can go to get financed for something like this? I have 30% down, perfect credit history etc...

Thanks!

V
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Old 05-23-2012, 10:08 AM
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We just purchased acreage as well and had a heck of a time finding a "raw land loan"
institution.

A google search of raw land loan + the city resulted in a score for us and 30% down was the minimum. Also you can try a local realtor and they should be able to give you a contact as well.

It was 8 messages left and ONE called us back. Irritating but we hung in there in order to get to "safety" in building our BOL.

Good luck, do NOT give up!
Old 05-23-2012, 10:12 AM
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Most undeveloped land is financed by the seller. Very few banks will loan against it with some small exceptions such as you have a house going to be built on it. Even with a house loan they are reluctant to lend on greater than 10-20 Acres depending on location. My folks (long time ago) were required to buy 3 acres outright with a property contract on the rest of a large acreage in order to get a home building finance loan.

Farm land sometimes can be financed through farm lenders. Might also be a avenue to pursue.
Old 05-23-2012, 10:48 AM
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Had the same experience when we bought our property a couple of years ago.

Neither my local bank nor the mortgage company we used to have our home
loan with could even be bothered to return my calls once I mentioned that
I was looking for rural land loan on 40 acres. Bullet proof credit rating and
plenty of cash for a down payment, but I couldn't get the time of day out
of either one.

(My bank blowing me off ticked me off the worst. I keep plenty of money
with them. Seems like the minimum courtesy they owed me was to tell me
to go pound sand instead of just ignoring repeated requests for a response.
Maybe they don't need my money in their bank that bad after all...
But that's a fight for another day.)

Eventually just said "screw it" and bought the property with cash.
(But it was only about half the going rate of the $3,000 per acre that
the O.P. mentioned, so the $$ amount was a little easier to manage.)

Anyway -- couple of suggestions --
Put the real estate agent to work for you -- He / She is obviously
motivated to make this sale happen, so ask them to track down some
possible loan sources for you.

And I've heard that local rural banks might be more inclined to loan
the money. They understand the local economy and rural land sales
better than the more traditional residential mortgage companies and
banks.

Good luck!
Old 05-23-2012, 10:52 AM
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Thanks everyone! I'll keep looking and talk to the local banks to see what I can get.

V.
Old 05-23-2012, 12:03 PM
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Are you in an area that qualifies for USDA loans?

Many banks will not lend for unimproved land, or if they do the terms will be much different than if you bought a house. Think 3-5 year loan with 30%+ down for example.
Old 05-23-2012, 12:19 PM
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Land where I am here in central TN, plots of empty land are pretty much bought with cash. I called my mortgage company about refinancing our place sine we actually have equity and adding the 6 acres next to us, that was pretty much the end of the conversation.

You might talk to them about a loan to build a new home with the land included, but they might not want it to be 40 acres.
Old 05-23-2012, 08:26 PM
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Land loans aren't done much anymore (you're about 5 years late to that party). As mentioned before your best best is looking for "owner carry" or "owner financing available" in the description.

30% down would be a bare minimum. Most banks are going to require 50% if they even do land loans in the first place. Again, sellers may be much more lenient than banks in this respect.
Old 05-23-2012, 08:44 PM
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Quote:
Originally Posted by voland View Post
So I've been looking around and it seems like 40 acres or so will run about 120k or so where i want the land. I talked to my bank and they are basically telling me that they will not loan any money on undeveloped land. Any ideas where I can go to get financed for something like this? I have 30% down, perfect credit history etc...

Thanks!

V
Very hard to find a bank that will do a loan on just land. Unless that land has some other type of value (mineral rights). Best bet would be to find a small local bank. Or as other have mentioned ask the seller if they are willing to "owner finance" or "hold the mortgage".
Old 05-24-2012, 02:09 PM
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We had to get creative to buy our land. We wanted to get a home equity loan to fund the purchase, but didn't get one large enough to purchase the land outright. The realtor suggested a strategy that ended up working and we now own our land free and clear.

Basicly the asking price was 150k and we could only get a HELOC for 80k. What we end up doing is offering 50% down, with a five year mortgage carried by the sellor. The trick was the mortgage was yearly payments, not monthly ones. After paying the down payment, we started paying down the balance of the HELOC each month. By the end of the first year, we had more than 15k of additional equity, so we could withdraw another 15k to pay the yearly mortgage payment. We did this 5 times over the course of 5 years till the mortgage got payed off and we got title to the land.

We're still paying down the HELOC, but expect that to be paid off in the next 4 years. At that point we'll own both our 40 acres and be completely debt free.
Old 05-24-2012, 02:22 PM
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Some banks won't unless there is a house on it
Old 05-24-2012, 02:34 PM
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Will their be a realtor involved? Because, it was the realtor who told me what bank fianced the neghboring property.
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