Land Loans Can Make Buying Land Much Easier

Written by: Arron J. Staff writer @ Hyggehous.com

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Buying a piece of land looks very attractive to those who want a fresh start, a way to build something brand new that's all their own.

While developing a piece of land can be a very exciting venture, there is so much to learn about the costs behind it and how to go about buying it. Many people are interested in building a brand new home that won't cost them much in repairs, and that would be sellable in the future. There's also the dream of living off the grid or building a homestead to become sustainable that attracts many people. Shop Tiny Homes If you have the money to buy the land outright or if you're lucky enough to have land given to you from a family member, this makes things very easy. But this is not where the good majority of people are. So that's where things like land loans come in to make it easier for people who don't have outright cash to purchase a piece of land. The first thing you have to get clear on is what the land costs include. That's where property lines come in, and it's why everything needs to be professionally surveyed and written out on paper to be shown to your lender. You also need to do your research and see what utilities are included on the land such as sewer, electric, water and so on. If these are not on your land already, it costs a lot of extra money to implement them. Also, easy road access is another factor that will make a property more desirable. If there isn't easy access to the property from the main road, this makes it tough for not only you to access the property but builders who have to be transporting materials to your land.

You will also want to check into the zoning and find out any land use restrictions, so check with the local authorities in the planning department to see what those are.

Also, check in to see if there are any future plans for the area around the land you're looking at. Parks and gathering spaces can increase property value while things like sewage plants will bring the value down of course. The mortgage and interest rates for land loans will also depend on what you'll be using your land for. The lender wants to know what type of risk they're getting into, which can make getting the loan a bit harder than buying an existing house since there is no collateral on bare land. Your best bet when looking for a land loan is to show the lender exactly what you have planned and that you intend to start building immediately. The down payment on the land loan is usually anywhere from 10% to 20%, but it can also be as high as 50%. The loans that require a higher down payment are the ones where the land will not be used immediately or if the land will be harder to develop.

There are a few different land loan options that can be great for different situations.

Seller financing is great for a seller who wants to hand off their land when the market is good. This would be a sale between two private citizens where everything is negotiable including the down payment and the interest rate. With this type of land loan, it's crucial to have legal papers created and reviewed so that there are no troubles down the road. Local banks and credit unions are usually good sources for land loans rather than big banks. The local banks are more invested in their communities, and they also may know a bit more about the local land and property values. As a borrower, you will have to come up with a loan package that you will present to the bank to show your plans and your creditworthiness. So if you're interested in buying land, the best thing to do is to talk to local banks and real estate agents and research as much as you can before investing your money.