The unexpected downturn of the housing market had a big effect on financial lending. The prospects are still gloomy even for the conventional purchase for money mortgages. Buyers of pre-existing homes are finding it hard to secure loans. These challenges are amplified for the lot, land and construction loans which are non-conventional. In worse case scenarios, these types of loans might be absent from some markets. However, we have recently seen an improvement in the housing and lending markets. When looking for loans for purchasing land, this guide will come in handy.
Beginner’s guide when looking for a land loan
Where to start?
If you want to pursue a financing option, first check out what options are on avail. Set your financial statements in order so that loan seems like a worthy investment to the lenders. In the beginning, try to find a mortgage broker or lender who understands your special set of needs and has experience in issuing that particular type of loan. Once you get pre-qualified, you will understand more about the budget you are working with and its limitations. Not all mortgage brokers and lenders issue vacant land loans. Therefore ensure you are working with people equipped with the right network, resources, and expertise.
Avoid the big banks
When working directly with lenders beware that it’s much more difficult receiving loans for purchasing land. You can increase your chances of approval by opting for a smaller credit union or community bank. This institutions are better placed to fund these types of property loans within their areas. You can scout for other lending options such as VA loans for the lot purchase or home construction.
Advantages of experienced mortgage brokers
Experienced brokers have a wide variety of loan options than regular sized banks. This is because they operate with many lending institutions countrywide. The wide variety of lending sources means that mortgage brokers can access better deals when the local banks are directly contacted.
Other ways of securing finance
After trying out mortgage brokers, traditional lenders and government programs to no avail, go for other alternative strategies. You can seek out family member loans or home equity from your current residence. Financing from sellers is one great possibility as they can finance the purchase. This means you do not have to fork out the entire property purchase price alone. There are those borrowers who sell their current homes first then rent a home.
Things to consider when buying land
Once you have secured financing, here are some important tips to remember. When shopping for a land site, it’s important to consider the access area. It should be accessible on public roads. Utilities and improvements such as electricity, streetlights, public sewers, water and natural gas are important too. If they are not included when purchasing one of the proposed building lots future costs might arise when developing your site.