GreenMonster

Does anyone know if I can get a mortgage on land without having to build on it ??

I'm just doing some preliminary research. I'll probably be putting down some cash, but not enough to cover the whole purchase price. Not sure what the percentage would be as I really haven't found a peice of land yet.

I'm thinking about buying some land, but most banks want you to build on it with in a year, which is not something I want to do. I looking at holding the land and then building a retirement home out it somewhere down the line.

My step-dad bought 5 acres in a Providence RI suburb about 25 years ago for $5000. The area is now very popular, so he did well on his investment. He's built a retirement home on it for him and my mom. I'd like to do something similiar, but I don't think there are any bargains like that around anymore...

chef chris

Most want atleast 20% down on raw land & Yes, they want you to build in a year(or two)...BUT...you may want to check with a local bank that deals in a fair amount of second mortgages(rates are a bit higher than a purchase-money first)...that might be your best bet. As long as they know you still INTEND to build, they may finance and waive the stipulations(ie: as long as they know it's not a short-term flip for pure investments sakes). They may even have a pre-payment penalty in the note to ensure you keep the property for a few years, etc.

Best thing to do is just go into your bank & talk to a lender...

GreenMonster

Thanks Chris, that's what I thought. Figured that there are enough peeps here in the finance industry, so that I could get some idea of how the conversation w/ a bank would go.

When I say I won't be building on it right away, I mean for like 20 years or so

dallison

bwhahahaha

GreenMonster

What are you laughing at, spankee boy ??

dallison

:you:

but its a good question, too bad bigpimp wasnt her to give you an answer

GreenMonster

ME?? Hey, I'm just trying to set myself up with something so when I want to move out of the shed I'm living in, I've got somewhere else to go

My Step-dad and Mom built this on the 5 acres he bought for $5k. We built another 2 car garage on the property in the summer of 2003...



I'm just exploring my options... I guess I could just put 2-3 hundred extra a month against my mortgage and use that equity later on to buy something.

GoDucksCLSPride

I am a mortgage broker and my lenders who offer land loans have the biggest pain in the ass requirements; its just not worth it if you do not have immediate plans for improvement.

With short term improvement plans, you apply for a construction loan with reasonable terms. If its just the dirt that you want to purchase and hold, you will need 20% down at a minimum and the rate is less than ideal. The requirements are such a pain because the bank has little colateral to secure the loan. Reposessing dirt doesnt necessarily return their investement if you default. Crappy rate and terms supplement that risk.

Your best option to purchase the land is by cashing out the equity in your house, assuming you have enough. Thats the best way to make any large purchase come to think of it.

BigPimp

These guys are right, land is a PITA to finance. We don't do land loans and we are one of the biggest lenders.

Your best bet would be a local bank that knows the area, also paying cash using equity of your current home is a great idea too. Good luck.

GreenMonster

Thanks guys... That exactly the kind of info I was looking for.