How to Finance Land
If you have found the perfect piece of property, the next step is to contact your Realtor and close the deal. If you have cash on hand to pay for the land, you won't have to worry about obtaining financing from your banking institution. Most people have to contact their bank and ask for a loan to be able to finance the land. If your credit is less than perfect, you can acquire the land purchase by means of a land contract. By knowing the steps to take along the way, you can make your land purchase and financing experience a smooth one.
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Instructions
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Using a Bank or Financial Institution
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1
Locate the land that you would like to finance and take note of the exact address of the property.
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2
Contact your Realtor or your attorney to make an offer of purchase.
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3
Accept the offer of purchase for the land.
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4
Contact your bank or financial institution to begin the loan application process and set up an appointment to come in.
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5
Bring all financial statements and asset information to the appointment. Make sure your credit score is above 650 before applying for a loan, otherwise you may be rejected.
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6
Contact a land surveyor to assess and perform a perk test on the property.
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7
Take the perk test results to the bank or financial institution and complete the application process.
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8
Receive approval for your loan from the bank or financial institution.
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9
Set up an appointment to meet at the title company with the current property owners, your Realtor or attorney and yourself to cash out the land with a wire transfer from the bank.
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10
Complete the closing process and receive the deed and title to the land.
Using a Land Contract
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11
Locate the land that you would like to finance and then take note of the exact address of the property.
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12
Contact the land owner or your attorney or Realtor to see if the owner would be open to financing the land on a land contract.
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13
Accept the owner's terms for the land contract.
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14
Contact a land surveyor to assess and perform a perk test on the property.
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15
Meet at the Realtor's office or title company to close the deal on the land contract. Bring the down payment for the land contract and all of the closing costs to the meeting.
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16
Acquire the title and deed to the land.
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1
Tips & Warnings
The land owner may respond with a counter offer, which you will have the option to accept or reject.
Go online to obtain your free credit report and FICO score before you make an offer on any property; this way, you can be assured the bank will most likely approve you.
A credit report may not have to be run if you are obtaining a land contract.
Use a cashier's check for paying funds at time of closing.
A land contract may require a large down payment, while financing through the bank may not.
Make sure an attorney or licensed Realtor handles the closing of the property.
Be aware that a land contract can sometimes have a balloon payment that will be due in full and if you don't make the payment, the previous owner will take possession of the land.
References
- Photo Credit Countryside land image by Rose from Fotolia.com
Comments
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I am ready to buy some land and build a house on it. This is one of my lifetime dream. the problem is "I am in the military."
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I have been in the mortgage business for 8+ years. I am very familliar with the mortgage process. If you have questions or concerns feel free to give me a call at 866-295-9339 x 777. Ryan Salo Bank Of England. FDIC, Equal Housing Lender.
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epow
Jun 28, 2010
These steps are useless. If you try to go into a land purchase agreement in today's market with less than 20-30% down or without pre-approval you are screwed. Most land purchases are cash deals. So step #4 is step #1. It is obvious the author knows absolutely nothing about land purchases or building homes. Avoid this horrible, useless advice.
