Land purchase advice needed

dmccarty · Dec 17, 2008

There was an article in the WSJ yesterday about the USDA providing loans. They talked about a guy buying a house with a USDA loan in a town near me. That town is more city than rural at this point but it meet the USDA rules. Might want to take a look at USDA and see if it would work with you.

I would try the Farm Bureau which I guess is Farm Credit in other states. I did not know about the FB when we bought land. Need to have a chat with them about the remaining amount we have on our land. They might give a better rate.....

My wife is a broker and she received an email from Sun Trust about 30 year mortgages at 5.0%!

We have to start researching the refi. 5% would save us a good amount. It seems like the rate is going to fall given the financial events.

Later,
Dan

MarkV · Dec 17, 2008

There is a fair amount of owner financing done in my area. It is common enough that the lawyers have some standard agreement forms. Generally the buyer is paying all survey and legal fees. The agreements are normally for 15 years and run 1 to 2 points above a conventional mortgage rates at the time.

MarkV

Podunkadunk · Dec 17, 2008

Thanks again for all the replies. I'll try and answer a few questions you guys put up.

Can I wait to buy it? Yes. As someone stated, the market is flat. I've lived here for a little over 2 years (originally from this area though, military took me away) and the land has been through 2 different realtors signs. I don't feel it's going anywhere anytime soon, but don't want to chance it either

. It's like anything else...a craps shoot.

Why don't I buy it all? Would I if I could? You betcha! But I don't want to get that far into debt. I just want the 20-25 acres that connects up to the 35 that my home sits on. My place is mostly wooded, swampy in areas because I have a creek flowing through the middle of the 35. This land is flat, high and dry and 3/4 of it is cleared with the surrounding in planted pines about 10-12 years old. It's pristine property with county road frontage and more deer on it than you can shake a stick at.

I made some calls yesterday to the formerly called Federal Land Bank, now called Farm Credit. I have rep's that are supposed to call me back (well, they did, but I was out on a deerstand). I want to get all the ins and outs and since the Fed has lowered the rate to almost nothing, I should be able to do ok.

Right now, I have a VA backed loan on this place. VA won't do a deal on property alone (no home on it), so I can't use them. However, with the rates lowering, I may try and refinance my existing place and add the price of the new property into it. I'm just trying to avoid stinking PMI! I can put 8-10k down, cash, from emergency funds.

- I won't use this place as "collateral", just won't put myself in that kind of pickle. No matter what happens, my retirement from Uncle Sam pays my mortgage here, with a little to boot.

I don't know...I'm working it and will consider the options you guys provided here when talking to the loaners. I know they're "hungry", evident by them calling me back in a hurry. There's a way to do it, I'll find it and if all turns out right, I'll own a fine piece of property that ties into my existing

I'll keep you guys posted...it's going to get interesting.

Podunk

MossRoad · Dec 17, 2008

Podunkadunk said:
...
Right now, I have a VA backed loan on this place. VA won't do a deal on property alone (no home on it), so I can't use them. However, with the rates lowering, I may try and refinance my existing place and add the price of the new property into it. I'm just trying to avoid stinking PMI! I can put 8-10k down, cash, from emergency funds.
...

Podunk

Don't dip into your emergency fund! Dave Ramsey will come after you.

I'm gonna ask you some questions, but do not want an answer. Just answer them to yourself, as it is none of my business.

You only need PMI until you own X amount of equity, right?

If you combine the house and the land value, then subtract the equity that you already have in the house, will you have more than the amount in equity required to not need the PMI?

That is how we got around requiring it when we purchased our land. Hope it works out for you.

Podunkadunk · Dec 18, 2008

MossRoad said:
Don't dip into your emergency fund! Dave Ramsey will come after you.

I'm gonna ask you some questions, but do not want an answer. Just answer them to yourself, as it is none of my business.

You only need PMI until you own X amount of equity, right?

If you combine the house and the land value, then subtract the equity that you already have in the house, will you have more than the amount in equity required to not need the PMI?

That is how we got around requiring it when we purchased our land. Hope it works out for you.

Good Point Moss.

!

riptides · Dec 18, 2008

MossRoad said:
Don't dip into your emergency fund! Dave Ramsey will come after you.

Aren't land grabs what emergency funds are for?

dmccarty · Dec 18, 2008

This thread started me thinking about doing a refi on out land and house mortgage.

Went to the NC Farm Bureau website and they have 30 year fixed rate mortgagest at %5 and UNDER. Did some reading at www.bankrate.com which mention that the Treasury department was talking about pusing 4.5% mortgages. The article said they would be suprised to see mortgages at 5% or less. They had ads on the website with rates at 5% or less.

The WSJ had an editorial last night about 4.5% mortgages and the need to have refi's at those rates. As I mentioned previously a Sun Trust banker sent my wife an email about 5% 30 year mortgages. Seems like the market is already moving to these rates.

I stopped at the NCFB office yesterday but they had just closed. I'm trying to find out about the home and land loans.

So shop around it looks like the rates have really fallen and as hard as it is for me to believe might fall even lower.

I thought a 7% mortgage was CHEAP. Our house now is under 6% which was like winning the lottery.

I remember not being able to buy a house because the mortgage rates were over 10%.

Later,
Dan

Flatheadyoungin · Dec 18, 2008

keep us posted......i read those great rates on bankrate, too but when i call farm credit services, u.s. bank and fifth third, they are all still around 5.6........which is much better than what i have but i'm looking for 5% hopefully 4.5% like you've been reading about....

if i could refinance my house (40k), roll my garage in to that (11k) and my land (110k) for about 5%, we'd basically have our current house payment (with garage) for free! ......i know, not really but the interest makes that big a difference...

dmccarty said:
This thread started me thinking about doing a refi on out land and house mortgage.

Went to the NC Farm Bureau website and they have 30 year fixed rate mortgagest at %5 and UNDER. Did some reading at www.bankrate.com which mention that the Treasury department was talking about pusing 4.5% mortgages. The article said they would be suprised to see mortgages at 5% or less. They had ads on the website with rates at 5% or less. The WSJ had an editorial last night about 4.5% mortgages and the need to have refi's at those rates. As I mentioned previously a Sun Trust banker sent my wife an email about 5% 30 year mortgages. Seems like the market is already moving to these rates.

I stopped at the NCFB office yesterday but they had just closed. I'm trying to find out about the home and land loans.

So shop around it looks like the rates have really fallen and as hard as it is for me to believe might fall even lower. I thought a 7% mortgage was CHEAP. Our house now is under 6% which was like winning the lottery. I remember not being able to buy a house because the mortgage rates were over 10%.

Later,
Dan

Podunkadunk · Dec 18, 2008

I called CB&T in Dothan, AL today. Talked to a girl named Gena, whom I've done business with before. She said the conventional rate on a 30 year note was down to 4.25%, with 1 point fee. eek:

Said the 30 year VA was at 5% even. Both rates reflect stellar credit.

She said they don't do "farm-land" loans and referred me back to Farm Credit. I've already contacted (and spoken to them), I'm just looking for competition, so I can put a little squeeze on them and have some ammo to back it up with.

Podunk

HappyCPE · Dec 18, 2008

I'm kicking myself for 2 land deals that I missed out on. The first was 27 acres in a beautiful area of Delaware Township NJ in 1996, I offered 135k and it sold to someone else for 145k. Of course I could have found the extra money and met that deal, but I decided to only go so far... the person who got that land put a 6000 sf McMansion on it and is now bankrupt. Deal 2 was a year later, 37 acres for 120k, Franklin township, half cornfield, half swamp, but quiet, convenient location, but I was scared by a set of looney neighbors who told me that it was their land and they would kill me if I tried to run them off. They turned out to be nutjobs who were just renting the house next door and their landlord [with the sherriff] had to, you guessed it, run them off. So 3 years ago I took the plunge and bought the place I'm on now for a LOT more money. Moral: Do it now and don't have regrets, as long as you can actually afford to do it.

Financing, I think, is going to get better. There is a lot of money looking for a home, and there will be more later. I'm seeing 4.875/30yr fixed mortgage rates here and Jim Cramer [if you can stand him and his show on CNBC] yelled about 3.5% rates in a few months. By the time you work up a deal with the seller, get lawyers to do their thing, it should take a few months and you will have cheaper money.

If you can get land that will make you money, like Robert's example, all the better. Plant an orchard on that land? Xmas tree farm? Fence it and rent to an organic veggie farmer? If you can get it to pay for itself then it's like no risk at all. Of course, as soon as I can figure out how to monetize my land, I'll let you know how to do it!

Basically, if you want it, and it makes financial sense, do it. You'll be kicking yourself forever if you don't.

[my 2 cents]