You often think to buy land and build a house on it. Maybe you don’t like apartments. Or maybe you don’t have to get any apartments in the city to live in. So you want to buy a piece of land and build a house on it. The one things that are most importantly needed is money to buy it. So here comes the land loan option. You can take a loan on land to work on your dreams. There are many loan products that you can choose in the market. Many banks offer many loans to be purchased by people in order to fulfill their dreams.
Percentage of loan given
You can get a maximum of 70% of the loan for your land. Respective banks may lend according to their credit guidelines. The loan to value(loan to value) is lower than those of home loans.
Things to be remembered for land loans
- Check how flexible is the paperwork and other formalities.
- The speed of processing the loan.
- Flexible repayments.
- Interest Rates.
- Fees and Charges.
Types of land loans
There are following types of land loans that you can avail
Lender Land Loans
Here you have to find a lender with the presence near land you want to buy. The local guys know the area very well and can better assess the value of the land and its potential. Interest rates could be high for underdeveloped land. You have to shop around for a better deal. For example, the lender may charge you a lower down payment and interest rates if you plan to build the land soon.
USFA Rural Housing Site Loans
The US Department of Agriculture has a couple of loans that can help you. If you want to buy a primary residence in the rural area this can surely help you. It provides two types of loans that are Section 523 loans and Section 524 loans. The former is for those who want to build their home themselves while the latter helps those who want to get their home build with the help of a contractor. These both loans are designed for families who have low income. Here interest rates are low. You may qualify for a loan with no down payment. It depends on the situation.
SBA 504 Loan
These loans have a repayment period of 10-20 years. The interest rates are based on the current market. The terms of loan vary according to the lender you choose. These loans are for those who want to use the land for their business. It occurs through the U.S Small Business Administration (SBA). Here you, the SBA and the lender contribute to the costs of the land purchase.
Home Equity Loan
If your home has significant equity you may have a home equity loan instead of trying to get a land loan. There is a low-interest rate and there is no down payment on the home equity loan. The only problem is that if you become default you could lose your home. And your repayment term could be between 5 and 30 years.
Here the person or company sells the land by offering short-term financing. Here the seller is not the lending business does not have a broad portfolio. As a result, you can have
There are plenty of options available to you. It on you to choose from. Do a proper study and plan accordingly.