From a borrower’s perspective, it often is more difficult to get lot and land loans than it is for the same borrower to get a loan for buying a built home. Understanding the bank’s perspective can help explain some of the reasons why lot loans and land loans are treated differently by banks.
In the first article in this series we discussed how your own personal situation and needs can help you decide whether you should seek a construction loan, lot loan or land loan for buying a homesite and building a new home. In other related articles we explained how Home Construction Loans have their own unique requirements and procedures and also described the terms for Lot and Land Loans in more detail.
Borrowers who are seeking financing will learn that lot and land loans can be both harder to acquire and have less favorable terms when compared to the typical “purchase money” loan for buying an existing home. In fact, you may find that some banks just don’t offer lot and land loans at all, or only provide them with onerous loan terms that you would not even want to consider.
In our first article in this series we help you decide between loan types, and whether your situation means you need a construction loan, lot loan or land loan for financing a lot purchase and building a new home. This article gives you some more information about the particulars of Land and Lot Loans.
It’s safe to say that loans for vacant land are different than “purchase money loans” for buying already-built homes, and there are a number of reasons why banks treat land and lot loans differently. In this article we describe what those differences mean from a borrower’s perspective, including details about the loan terms, additional underwriting requirements and other characteristics of lot and land loans.
Lenders may Distinguish Between Lot Loans & Land Loans
Although we’ve included loans for lots and land in the same discussion here, there even can be differences in a lender’s loan terms and requirements based on whether the property is a finished lot in a platted subdivision or is a vacant, undeveloped parcel of land.
The loan terms and underwriting for a formal lot with a road and utilities may be less rigorous than loans for undeveloped land. A finished lot can give the lender more comfort, as it is another step closer to being ready for a new home (the preferred form of collateral for most residential lenders). Read more…
Buying land and building a new home can be an exciting experience, and if you plan to get financing you need to understand your options related to lot loans, land loans and construction loans.
What kind of loan is right for you? Even though it may seem obvious, this question does not always have a clear answer and the subject often is misunderstood by potential borrowers. It’s important to understand that these loans have unique characteristics and the lending options that are available for you will depend on factors like your personal situation, the type of property you are buying, your level of preparation and your timing for building a home. This article will provide an overview of (a) Lot and Land Loans, and (b) Home Construction Loans, to help you consider what fits your needs. A related article in this series goes into more detail about the terms for lot and land loans and another describes the terms for construction loans (coming soon).
These Loans Are Different
Most homeowners are familiar with the typical mortgage loan used to finance the purchase of an existing, already-built home (referred to by some as a “purchase money” mortgage or loan). Purchase money loans are the standard of the residential lending industry, and entire financial markets, mortgage products and automated systems have been created to make these loans efficient and easy for banks to underwrite and process. Read more…
Your search for the American Dream. What to consider when choosing the path to your next home…
Most people dream of owning their own home at some point; that’s why it’s called the American Dream. All prospective buyers want to find the right home for their family and their lifestyle, but the way each of them get there can be very different. Do you buy an existing new (“spec”) home? A previously-owned home? Or do you build the home of your dreams from the ground up?
If you’re ready to pursue the American Dream – for the first time or the fifteenth –we can help you better understand your options. And, as the nation’s premier web site for residential lots and land, we have the resources to help you when you are planning on finding the perfect lot and building your new home from the ground up.
Obviously, each real estate market, home and buyer situation is unique, but here are some thoughts that can help guide your decision-making process.
Buying a Previously-Owned Home
It’s safe to say that most homeowners buy a pre-existing home at some point in their lives. In most markets, there is a greater inventory and more variety of existing homes that are being sold by their current owners. If you’re attracted to homes with character, history, charm and perhaps a certain type of craftsmanship, an older home may fit the bill for you. Pre-existing homes often are the choice for those focused on their location and commute in that they can be closer to work if you’re employed in a city. Older neighborhoods offer established trees and landscaping (and sometimes a bigger lot), whereas new homes will have younger landscaping and in some new home communities the homes are built on smaller lots. Read more…
Happy New Year from LotNetwork.com, and here’s to a great 2014 for you whether you are selling residential lots and land, buying property for a new home or project, or building and developing to sell new homes. We covered many useful real estate and homebuilding topics in 2013, and will give you a brief overview of some of our most popular posts from the past year that you can use throughout this new year too.
Start off your new year with a fresh look at your property listings. Our New Years resolutions article gives property Sellers 3 tips for getting your property sold:
(1) I resolve to re-energize my selling efforts,
(2) I resolve to use targeted marketing to the right kind of buyers, and
(3) I resolve to be realistic about my price.
Read the full article for more details. Accomplish these 3 simple things (come on, it’s not like losing 15 pounds!), and you can get your property sold.
Green home building techniques are increasingly being incorporated into homes, as the technology becomes more common and affordable. So even if you do not choose to have your home certified as “Green”, this article lists 10 Green Home ideas that you can consider including in your new home.