Financing Land

[TimC]

They'll finance it, they just want 20% down.

Actually, that's part of the problem here. I have 20% to put down and the banks still aren't interested.

Thanks to all for the heads up on Farm Credit. I'm going to make some calls in the morning.

 

[SnowRidge]

Best of luck.

 

[MossRoad]

Actually, that's part of the problem here. I have 20% to put down and the banks still aren't interested.

Thanks to all for the heads up on Farm Credit. I'm going to make some calls in the morning.

O.K. I get it now. You have the 20% and they still won't give you a loan. Weird. What is the zoning on the land... residential, agricultural, etc... ??

 

[TimC]

O.K. I get it now. You have the 20% and they still won't give you a loan. Weird. What is the zoning on the land... residential, agricultural, etc... ??

Zoned R1, which here is "Rural Residential". If I could convince the lenders that the cabin had running water and a bathroom, (Other than the creek and trees) I'd have been financed yesterday with great terms. But, since at even a distant glance that is obviously not the case, I have to be honest, and the "unfinished" cabin is the hold up, making it a "land only deal" keeping normal banks away.

From the looks of the website, my local branch of Farm and Home Loans Everything you need to finance your dream in the country should be able to accomodate. We shall see in the AM.

 

[EddieWalker]

When I bought my land 4 years ago, they required 30% down for raw land. No home or utilities on the land at thte time. I talked to several banks and got the same story.

I put the money down and was able to lock in a fixed rate of 7% for five years, then it went variable. Luckily, I was able to sell most of it and pay off the note for the 68 acres that I now own.

Eddie

 

[rgood]

As everyone has already said, Farm Credit may be a possibility.

Another viable option is to borrow against a mutual fund.

Another thing to do is to go out on the net to whatever companies you can use to get you and your wife's credit score - Once you've got that it's easier to go bank shopping - Do you have a realtor? They helped me find 2 banks to choose from, that I was unaware of, on our land purchase.

A 4th option is to find one of those guys that's a loan shopper - They advertise by saying they will find lowest rate for you - I have a friend that does that.

 

[dooleysm]

I don't understand why you wouldn't go with a home equity loan? Unless the rate is just too high, you get the benefit of using interest payments on your home equity loan as deductions on your federal taxes, assuming you itemize.

 

[KentT]

As mentioned, I used Farm Credit to buy my retirement tract in Tennessee a couple years ago. Required at least 20% down, but was probably the easiest loan I've ever gotten, as far as paperwork and customer service goes... Painless. Rates were excellent too -- slightly over 6% as I recall.

Another plus is that they will consider equity in the land when it comes time to build, helping deal with the construction loan and any resulting morgage. In fact, I got a "closing cost discount" coupon for use when I do that...

 

[MossRoad]

I don't understand why you wouldn't go with a home equity loan? Unless the rate is just too high, you get the benefit of using interest payments on your home equity loan as deductions on your federal taxes, assuming you itemize.

.... and assuming your itemizations exceed the standard deduction. We have itemized for 22 years and have never beat the standard deduction. We came close one year. However, we are fortunate to have good health and to live in an area with cheap housing. That may change if we build a new house rather than moving up to a used home again.

 

[TimC]

The reason I don't want to do a home equity loan is because it would put me at ~10% equity in my current home, making my rates not so good. Plus, if I decided to sell my current home, I'd not get the equity out of it to put towards something else. By financing the property separately, I have decent equity in both properties and be more flexible if we decided to sell one or the other...

Off to Farm Credit...