When you’re going to buy land, you’ll find that land loans work much differently than other types of real estate financing. There are loans that you can get and will want to secure, but first, you need to know the difficulties ahead.
Lenders Take a Risk With Land
From a lender’s point of view, there is a huge risk when financing a land purchase. Why? Let’s take a look at the facts.
- Borrowers can easily stop paying land loans.
- Real estate with a building or structure is a form of collateral.
Unless plans for the land are ready to be put into action, land is a much higher risk for the lender. If you purchase a home and decide to stop paying the mortgage, the lender can repossess the home and sell it to recuperate their money.
When it comes to vacant land, the lender can still repossess the land, but they will have a harder time selling it at a break-even point. Obviously, with higher risks comes a harder time finding land loan financing. As a buyer, you need to have some money on hand for your purchase as you will see shortly.
What Type of Loan Is Needed to Buy Land?
This is a very tricky question to answer. If there is a property on the lot, you’ll be able to get a regular mortgage. Otherwise, you’ll be looking at what’s called a “construction loan.” These are loans that are given based on the fact that you will construct a building on the property in the near future.
These loans often require you to have plans on what you’re going to do with the property. An inspection and plans may be required to get the loan.
If you want to purchase just the land and don’t have any plans for immediate construction, you’ll need a raw land loan. These loans are very difficult to obtain because the investment is not one that will grow in value quickly.
How to Finance a Land Purchase
Now that you know what a traditional lender will offer, it’s important to know other options you have available to finally make your purchase. First and foremost, the loans above will require a 20% - 50% down payment.
If you want to secure financing using another avenue, the following options are available:
If you want to buy land for sale with no credit check, the easiest option is either: a large down payment or seller financing. When buying from a seller, you will be paying the seller directly instead of paying a lender. Essentially, the seller will take the lenders place.
In this case, you’ll:
- Easily obtain a loan.
- Make monthly payments to the seller.
- Must pay the loan back faster.
Most seller financing options require a short repayment period, typically 5 years. At the end of the 5 year contract, you’ll need to pay the entire balance left on the loan.
Home Equity Purchases
Do you currently have a home? If so, you can choose to take out equity against your home to finance your purchase. This works in the following way:
- You take a loan out on the equity you have paid into your home.
- The equity loan will be rolled back into your mortgage.
- You use the money from the equity loan to purchase the land for sale.
It’s a simple process. If you’ve paid into a loan, you can essentially take that money back out of the house and buy land. If you’re buying a very high priced piece of land, this will mean that your loan payments will go up accordingly.
Credit UnionsCredit unions are smaller lending institutions that have rules that are more relaxed than a traditional lender. Oftentimes, credit unions have lower down payment requirements and provide a very pleasing level of customer service.
If you’re stuck trying to get a loan, a credit union is the first place you should look.
Talk to one of the loan advisors in your local credit union and ask them for advice on getting a loan for your perfect piece of paradise.
The Power of Cash
Sometimes, land can be purchased for under $5,000. These are small loans and a $1,000 down payment will allow you to secure a loan from most lenders. If you have the entire amount in cash, you can:
- Secure a loan much faster - if you want a loan at this point.
- Can negotiate lower sale prices from sellers.
The real deals come when you have enough cash to purchase land outright. This is not the norm for most buyers, but it’s a great option that you need to consider. Taking out loans from family members and providing a cash payment will eliminate the need for interest and allow you to purchase land for a huge discount.
Cash can also come from tax rebates, bonuses or selling a used vehicle.
LandCentury.com specializes in selling wholesale real estate at the lowest prices. We believe that everyone should have the right and the opportunity to get a great deal on investment property All you have to do to get the property you’ve always wanted is follow these simple steps:
Step 1: Find the Perfect Property
Use LandCentury.com’s powerful network of real estate listings to find the property of your dreams. We have everything from move-in ready investment properties and cheap houses to rural land, buildable lots, and fixer-uppers. No matter what type of real estate you’re looking for, you can find it at LandCentury.com
Step 2: Click the Buy Button
This will start the purchase process. As one of America’s top online property listing sites, we leverage our unique business model of submitting an online payment to hold the listing to make transactions straightforward and secure. Our purchase process is designed for simplicity and security. Once you click the buy button, you will:
Use our secure site to submit your processing fee. We make every effort to protect your privacy. That’s one of the reasons why we offer a 24-hour money back guarantee on your processing fee, so you can feel confident in your transaction.
The seller will contact you within the next 24 hours procced to the next step and get the necessary info to prepare the contract.
Buyer Transaction & Privacy Protection
LandCentury.com stands behind our buyers, and we want you to know that your hard earned money is safe when doing business through us. That’s why we have a number of features to help protect buyers, including:
Symantec Secure Site SSL certificate, providing a $1,500,000 warranty on every transaction
Secure encryption and data protection
24 hour money back guarantee on processing fees
2 separate legal offices across the country to help you with any problems you encounter, anytime
Seller ratings so you can see what other people have to say about their experience with your seller
Still Have Questions?
We’d love to answer them. Check out our Help Center page or call us at 1-888-LAND-WEB (526-3932)
Our highly specialized support team is ready to find a solution to your problem. A people first policy insures that a team member will always be available to speak with you personally.
Symantec SSL Certificate
Symantec is a global leader in providing security, information management solutions to help our customers – from consumers and small businesses to the largest global organizations – secure and manage their information against more risks at more points, more completely and efficiently than any other company. Our company’s unique focus is to eliminate risks to information, technology and processes independent of the device, platform, interaction or location.
This website can secure your private information using a SSL Certificate. Information exchanged with any address beginning with https is encrypted using SSL before transmission. LandCentury.Com LLC has been verified as the owner or operator of the website located at www.LandCentury.com. Official records confirm LandCentury.Com LLC as a valid business.
Better Business Bureau
For more than 100 years, Better Business Bureau has been helping people find businesses, brands and charities they can trust. In 2015, people turned to BBB more than 172 million times for BBB Business Reviews on more than 5.3 million businesses and Charity Reports on 11,000 charities, all available for free at www.bbb.org. The Council of Better Business Bureaus is the umbrella organization for the local, independent BBBs in the United States, Canada and Mexico, as well as home to its national and international programs on dispute resolution, advertising review, and industry self-regulation.
BBB has determined that LandCentury.Com, LLC meets BBB accreditation standards, which include a commitment to make a good faith effort to resolve any consumer complaints. BBB Accredited Businesses pay a fee for accreditation review/monitoring and for support of BBB services to the public. BBB accreditation does not mean that the business’ products or services have been evaluated or endorsed by BBB, or that BBB has made a determination as to the business’ product quality or competency in performing services.
Web Site Anti-Malware Scan
GeoTrust is the world’s second largest digital certificate provider. More than 100,000 customers in over 150 countries trust GeoTrust to secure online transactions and conduct business over the Internet. Our range of digital certificate and trust products enable organizations of all sizes to maximize the security of their digital transactions cost-effectively.
The GeoTrust Web Site Anti-Malware Scan includes a daily malware scan to detect malware and alert you with detailed information to respond quickly to the attack. What happens if malware is detected on this web site? If malware is discovered, the GeoTrust Web Site Anti-Malware Seal no longer displays. When the scan confirms that all instances of malware are removed, the seal displays again.
If you feel that you have been a victim of real estate fraud, there are many resources available for you as the victim. Your first step is to contact the local District Attorney’s office and report the incident. Our office will stand by you and provide any relevant information to support your claim. Here are additional agencies that can assist you and provide more resources: