Land Loans

A land loan, also referred to as a lot loan, can be modified for use by buyers who are not prepared to begin immediate construction but plan to do so in the future. These loans are standardized for particular neighborhoods with one utility being used, such as a road. On the other hand, construction loans are financed as alternate income. The key thing that one needs to understand before getting a land loan is that they have more requirements than home loans or other loan types. The logic behind this is that in a home loan, the home can liquidate easily, unlike in land, which would have to be developed before it can sell for profit.

How to choose a land loans financier
It is not easy to find a land loans financier. This makes it wiser to deal with a local financier because they probably have a clearly idea of the area within which you want to purchase land. They will also have a better understanding of the possibility of utility developments and availability from the local planning regulator, like the county or council planner. Asking for information from referrals is the best way to find a financier. They can be colleagues at work, relatives, or friends. Someone who has done business with them will most likely give you honest information of their experience with them.

Searching online is also helpful. Financiers regard land loans to be riskier, considering that the land is not in use. Interest rates are higher because the borrower can easily abandon the property, unlike mortgage loans. Raw land is considered land without immediate plans for development. Here you are bound to encounter challenges in getting land loans finance. Raw land does not have utilities, such as septic tanks, or sewer systems, power lines, roads and other structures. In such a case, your lender will most likely ask for a higher down payment in comparison to developed land loans. The purpose for use of the land also largely contributes to the interest rates applied. Choosing to develop your own land enables you to postpone some expenses for another day, whilst it also allows you to implement you own initiatives and creativity to suit your own taste.

Different land loans illustrated
The first type of loan that comes to mind is vacant land loans. This is particular land that is not developed, but which has plans for future development. In most cases, utility lines can be put up easily making it easy to develop the land. Then there are improved land loans, purposely tailored for land that has been developed or that has some ongoing construction. The partial development gives them confidence that completion will take place sooner, rather than later, improving the land value. This can include partially constructed homes and availability of utility lines.

Required documentation
There is always documentation required for any major property purchase, including land loans. In the case of buying land, involving an attorney is very important. A lawyer will be in a better position to verify the documents pertaining to land ownership, and can be very helpful in case of any lawsuits. Original land documents and records are required, including revenue and tax receipts. He will also verify the drawing, design and approval by the planning council.

Law land loans are tailored for land that has no trace of developments. This means, there is no access to utility lines. This kind of loan is very hard to secure and most lenders will ask for a higher down payment in comparison to other land loans. They may also ask for information on the development plans such as building and access to utilities.