Financing of raw land - what institution offers favourable terms?
- Thread starter mrcvs
- Start date
Register to hide this ad
CalmerThanYou
Member
- Joined
- Sep 7, 2017
- Messages
- 296
- Reaction score
- 578
Do you have a Greenstone Farm Credit near you?
Here in Wisco they work with folks who have agricultural land, hunting land and larger parcels of undeveloped lands. They seem to specialize in this unlike most lenders.
Here in Wisco they work with folks who have agricultural land, hunting land and larger parcels of undeveloped lands. They seem to specialize in this unlike most lenders.
dave holl
Absent Comrade
Back in the 70's I bought 100 acres of mostly wooded land for $110/acre. I paid the elderly owner so much per month on a land contract. She held the note and gave me a deed for the land contingent on my paying off the amount. A land contract in the hands of an unscrupulous seller back then, and especially today runs the risk of the buyer being on the short end of the stick. I trusted her and for me it worked out.
I paid it off, built a log cabin, and lost it in a divorce.
Lending institutions are reluctant to lend money on bare land.
I paid it off, built a log cabin, and lost it in a divorce.
Lending institutions are reluctant to lend money on bare land.
DeathGrip
US Veteran
Financing with little future in the property but taxes? 
In general, banks and other lending institutions are not real keen on land. You will never get mortgage rates, and the loan will probably be 2X the rate. i went through it. Put a trailer on it and see if it qualifies as a second home?
THE PILGRIM
Member
Do you belong or can join a Credit Union?
They can often offer favorable terms to members.
Here is NM we have a seller financing instrument called a Real Estate Contract.
If properly executed and the paperwork including the deeds are held by a third party escrow, if works!
I have used then to buy and sell a number of properties.
When you pay it off, the Escrow Company delivers you the deed.
If you default, the Escrow Co. delivers a deed to the seller transferring the property back to him.
They can often offer favorable terms to members.
Here is NM we have a seller financing instrument called a Real Estate Contract.
If properly executed and the paperwork including the deeds are held by a third party escrow, if works!
I have used then to buy and sell a number of properties.
When you pay it off, the Escrow Company delivers you the deed.
If you default, the Escrow Co. delivers a deed to the seller transferring the property back to him.
Last edited:
I used Farm Credit of the Virginias back in 1999.
Thank you for the advice. Unfortunately, the aforementioned is very regional. But, I have since explored other options.
It is sad that banks view a large parcel of undeveloped land as a liability. America is way, way, way overdeveloped already.
Is it 2 acres or 2000? Are you going to farm it or sit on it? House build? You say you are not planning on building soon, few lending institutions will lend on speculation which is what they view it as despite your objections to that.
hoosierone
Member
As a former banker, I can tell you we avoided these loans like the plague.
One possible option is to take a second mortgage on your personal residence and use the proceeds to fund the purchase of the land. That assumes you have ample equity in your current residence.
One possible option is to take a second mortgage on your personal residence and use the proceeds to fund the purchase of the land. That assumes you have ample equity in your current residence.
I've seen seller take-back mortgages recorded as a means of non-bank financing. But you need to deal with experienced settlement counsel to make sure that all the details are worked out, because the seller might have tax consequences. And just like a bank mortgage, miss a payment and you can lose everything.
vonn
US Veteran
Here in Texas we have the Veterans Land board that will finance land for veterans ,you may have something like that you could use.
I think this is a regional situation
I’m in West TN and bought 12 acres about 15 years ago.
I was able to get a 80/20 loan,20% down and 80% loan with a fixed interest rate through Farm Credit for a 20 year note.
I have heard from friends over the recent years that you could barely get a 70/30 loan then more recently I heard that they will only do a 50/50 or with excellent credit a 60/40 (which is a chunk of change in most cases)
I was lucky.... good luck to you
I’m in West TN and bought 12 acres about 15 years ago.
I was able to get a 80/20 loan,20% down and 80% loan with a fixed interest rate through Farm Credit for a 20 year note.
I have heard from friends over the recent years that you could barely get a 70/30 loan then more recently I heard that they will only do a 50/50 or with excellent credit a 60/40 (which is a chunk of change in most cases)
I was lucky.... good luck to you
BearBio
Member
Whatever you do, get an attorney who specializes. During 25+ years in the Title Industry, I saw MANY land sale contracts default. You can get 90% of it paid and default (or be late on county taxes) and lose the property (but get the equity, IF ANY!). Your state may very but legal advice is relatively cheap considering.
I could not find traditional mortgage for the hunting land I purchased few years ago. Our house was paid off so we just got an home equity credit line from our credit union which we used to pay for the land. We hope to have the land paid off in another 5 years.
THE PILGRIM
Member
No matter who finances your land, you got to pay off the loan!
It really don’t matter that much which state your in, financing document you use - no pay means no stay! If you default -They are going to repo the land.
You need the lawyer and title company up front to ensure you are getting what your paying for.
Things like - the seller is in title, their aren’t any outstanding liens, taxes are current, etc.
In NM and probably other rural areas, access can be an issue.
You want some legal, recorded permanent access (easement).
Fronting a public road is a plus. Land that’s stuck in the middle of a bunch of other parcels can be a problem!
It really don’t matter that much which state your in, financing document you use - no pay means no stay! If you default -They are going to repo the land.
You need the lawyer and title company up front to ensure you are getting what your paying for.
Things like - the seller is in title, their aren’t any outstanding liens, taxes are current, etc.
In NM and probably other rural areas, access can be an issue.
You want some legal, recorded permanent access (easement).
Fronting a public road is a plus. Land that’s stuck in the middle of a bunch of other parcels can be a problem!
Last edited:
I used colonial farm credit here in va a few times as well. They will finance any rural land. You get patronage check each year too [emoji106]. Excellent credit union who will remember you when you call or come in.
Sent from my SM-N950U using Tapatalk
Sent from my SM-N950U using Tapatalk
Truer words were never spoken. I spent 38 years dealing with all of these issues. Access is an issue to consider no matter what state you are in. Be sure to get a settlement attorney who has been in the business for a substantial period of time. Non-bank financing is not a common occurrence, so experience is important for whoever is settling the transaction. The lender is going to want title insurance. The lender's policy is not intended to protect you, so get an owner's title insurance policy for yourself. An attorney's certificate of title is only good as long as the attorney is alive and solvent. A title insurance policy is issued by a corporation with perpetual existence. The transaction has to be handled with all of the attention to detail and care that goes into buying a house.
BearBio
Member
Twenty-five plus years in the Title Industry. Golddollar speaks true but "customs" do vary from region to region.
