Many people see a piece of land and think of the different things they could do with it. Some want to build while others think that they could speculate and sell it in a few years for a profit. If this is you then we can help tame your expectations.
Banks prefer to loan money to already finished property or to very well laid out plans. If you are buying raw land and have not done your homework then there is a good chance that you get denied. If on the other hand you have put together all the research and proposed it well then you will likely be given the loan. Banks like safety and if you can not show how your project is safe then they will likely deny your request.
Since it is raw land you may have some unexpected hurdles. Banks do not look forward to lending money to project sin the middle of the desert. Instead they want to lend where they can see your vision as well. If you have land in the middle of no where then expect to pay a lot for the financing.
If it is raw land that is not even hooked up for sewage and electricity then the bank will want even more money to finance the project. This is again because of the risks involved from the lenders perspective.
If you are developing raw land it is vital that you get a staked survey done as well as have your financial statements in order. The better prepared you are the more the bank will like you and approve you loan.
When it comes time to finance the land you may be surprised to hear that a home equity line of credit or a second mortgage is often times your best bet for getting financed. This is because your home represents another piece of collateral. Banks do not like high risk projects.
Land loans usually have a ten to fifteen year term. Homes have thirty years but you live in them and they are a finished product. Raw land is not so the bank will not take on the extra risk of sitting on it for thirty years.
If the land is owned and held as an investment then you may be in luck. Many times the interest involved in land loans is tax deductible. And as we know anytime we can save money from the IRS is a good time.
Banks prefer to loan money to already finished property or to very well laid out plans. If you are buying raw land and have not done your homework then there is a good chance that you get denied. If on the other hand you have put together all the research and proposed it well then you will likely be given the loan. Banks like safety and if you can not show how your project is safe then they will likely deny your request.
Since it is raw land you may have some unexpected hurdles. Banks do not look forward to lending money to project sin the middle of the desert. Instead they want to lend where they can see your vision as well. If you have land in the middle of no where then expect to pay a lot for the financing.
If it is raw land that is not even hooked up for sewage and electricity then the bank will want even more money to finance the project. This is again because of the risks involved from the lenders perspective.
If you are developing raw land it is vital that you get a staked survey done as well as have your financial statements in order. The better prepared you are the more the bank will like you and approve you loan.
When it comes time to finance the land you may be surprised to hear that a home equity line of credit or a second mortgage is often times your best bet for getting financed. This is because your home represents another piece of collateral. Banks do not like high risk projects.
Land loans usually have a ten to fifteen year term. Homes have thirty years but you live in them and they are a finished product. Raw land is not so the bank will not take on the extra risk of sitting on it for thirty years.
If the land is owned and held as an investment then you may be in luck. Many times the interest involved in land loans is tax deductible. And as we know anytime we can save money from the IRS is a good time.
About the Author:
Spencer educates people about bad credit home mortgages, guaranteed payday loans, and home loans for bad credit.
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