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  1. #1
    Silver Member Jarrett's Avatar
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    May 2004
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    Holden, Louisiana
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    Kubota L3130DT

    Default Land purchasing questions

    My wife and I are looking at buying some land, 2-5 acres (more if possible, but land here is outrageous). Our intentions would be to put a mobile home on it and in 10 or so years build our house. If we were to purchase the land and finance it longer than the 10 yrs. (say 15 or maybe 20), would we have to wait until the land was paid off before we could get a construction loan to build a house?

  2. #2
    Gold Member
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    Aug 2004
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    380
    Location
    WA
    Tractor
    JD 3320

    Default Re: Land purchasing questions

    I don't think the land would need to be paid off to get a construction loan to build. You would have to still qualify for the construction loan and having debt (i.e. the land loan) would limit your credit, but depending on your income, other debts, credit rating etc you should be able to get a loan to build. We did our place as a land/home deal- a bit more complicated to sort out but it worked. We wanted to put up a manufactured home, but we couldn't find a bank to lend to us at reasonalbe rates, so ended up going stick built.

  3. #3
    Elite Member Sigarms's Avatar
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    Feb 2005
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    3,648
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    Mid north west in the state of N.C
    Tractor
    F3080

    Default Re: Land purchasing questions

    Short answer would be yes, but as stated here, most likely will depend on your credit.

    When my wife and I were looking for a new house with land, I applied through a federal credit union, and they gave me more than I thought I could afford.

    When we found a house with with 8 acres (with an option to by another 32 acres with the house), we ended up going through a farm credit union. We bought the house with 8 acres, carried two house payments for a short time until we could sell our old house, then applied for a second loan for the rest of the land (we were told before hand that we could do this with the two loans). We did put a down a payment on the additional land and had a year of the purchase date of the house to apply for the land as well.

    Bottom line is that we didn't want the house will all the land and a second house payment, thus the reason for "spliting" the loan for the "new" house and additional land.

    We were surprised how competitive the farm union was, was a very pleasant (sp?) experience, and the realtor, laywer and farm credit union rep all knew each other and worked with us very well.

    You may want to check any local ordinances/zoning (sp?) to verify that you can place a mobile home in the area that your looking at.






  4. #4
    Super Star Member EddieWalker's Avatar
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    May 2003
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    17,389
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    Tyler, Texas
    Tractor
    Several, all used and abused.

    Default Re: Land purchasing questions

    Allot of it depends on your credit rating and your relationship with your banker. Some banks will let you buy with 20 percent down and 15 years financing. If they don't know you, raw land might require 30 percent down.

    Once you have the land, it's easier to secure financing for building on it. Most moble home dealers will get you the financeing if you have the land. They don't care about what you own on it or even what you make. They charge crazy rates, have all sorts of fees and expect to repose a new moble three times.

    Good luck,
    Eddie


  5. #5
    Platinum Member sneaky_pete's Avatar
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    Aug 2004
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    676
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    Parker County, Texas and Santa Fe County, New Mexico
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    Kubota B7400HSD, G1800

    Default Re: Land purchasing questions

    +1 on the Farm Credit Associations. When we wanted to buy more (vacant) land, the conventional mortgage companies and brokers didn't want to mess with it, I guess they get all the business they want from conventional homeowners (and we have excellent credit BTW). The FCA knows about vacant land and rural living and was anxious for our business. The interest rates and available terms are different than conventional home mortgages, but very flexible.

  6. #6
    Epic Contributor MossRoad's Avatar
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    Aug 2001
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    29,146
    Location
    South Bend, Indiana (near)
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    Power Trac PT425 2001 Model Year

    Default Re: Land purchasing questions

    When we bought vacant land, we already owned a small home outright. To get a mortgage for vacant land, every lending institution wanted 25% down. We did not have the 25%. However, one local bank helped us by suggesting a blanket mortgage. We already owned a small home in town. We tied the house that we owned together with the land. With those two added together, we already owned 2/5ths of the total value. We were able to purchase the land with no downpayment and only mortgaged 3/5ths of the total value. It worked out well.

    So well, that when we bought a 2nd house, we did a blanket mortgage and tied the first home to the value of the second home. We ended up owning 1/3 of the total value and again, needed no downpayment. The only stipulation was that as soon as we sold the first home, we had to turn over enough $$ to the bank to keep over 25% of the equity in the 2nd home. We dumped it all on the loan and brought the equity to a little over 50% of the 2nd house. So we only had a mortgage on 50% of the value of the 2nd house and we owned the vacant land outright.

    It worked well for us. It was suggested by our local Farm Credit Services. They didn't handle those kind of transactions, but they were the ones that suggested the financial institution that did it for us.

  7. #7
    Silver Member
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    Sep 2003
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    Location
    Boone, Iowa
    Tractor
    1955 Ford 960 Wide Front

    Default Re: Land purchasing questions

    I took out a home equity loan on the house in town that I was living in to buy the lot for the home where we live now. The fact that I owned the lot free and clear made the bank happy when I went in for the construction loan.


  8. #8
    Super Member Highbeam's Avatar
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    Feb 2005
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    Location
    South Puget Sound, WA
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    Kioti CK30HST

    Default Re: Land purchasing questions

    I have a mortgage on a small home in suburbia. I took out a home equity loan to make the 20% downpayment on my vacant land. I called to get setup for a construction loan to build a home on the vacant land and then sell the suburban home. I was told that it is standard to use the construction loan is to pay off the land. The whole point of a construction loan is to build a home on land so why not use it to buy the land from yourself? It's just another cost.


  9. #9
    Elite Member KentT's Avatar
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    Mar 2005
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    Location
    Sevierville, TN
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    Power Trac PT 425

    Default Re: Land purchasing questions

    I also used Farm Credit Services to buy my rural property, and will be "wrapping" the remaining balance I owe on it into the construction loan. They'll do it either way -- it's just that now I'll have to pay closing costs twice.

    However, they will also consider any "improvements" I've made to the land (clearing, driveway, well, etc.) since I've bought it as part of the equity, since they will also have the land appraised again when I take out the construction loan. So, you can build "sweat equity" in land, also.

    It's SO VERY nice to deal with someone who understands rural property, and their rates are competitive....

    Also, I'm not sure if its the same where you live, but some states look at mobile/modular homes quite differently if you remove the axles and put them on a permanent foundation ... this might also play into how the banks/lending institutions deal with you...

  10. #10
    Epic Contributor Bird's Avatar
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    Mar 2000
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    Texas

    Default Re: Land purchasing questions

    Jarrett, I'm sure it's different in different places, but my brother bought 10 undeveloped heavily wooded acres a few years ago with a minimal down payment and allowed the company selling it to finance it. After we spent our weekends for a few months clearing a trail around the perimeter, and clearing a place to build a house and driveway, he applied at a local bank for a construction loan for him to build the house himself (with a couple of brothers to help). He drew his own blueprints and all. The bank was quick to approve the construction loan, to be rolled over into a conventional mortgage upon completion of construction, but they required him to have clear title to the land first. Fortunately, that was not a problem to pay off the land.

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