Land Loans/mortgages…?

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We would like to purchase land in Carbon County Pa. We would like to just mortgage the land but we are having trouble finding companies that do land loans. Can anyone recommend a Company which does do land loans? We would like to build o house on this land within the next two years but we would like to do the work ourselves. Where do i start ?? I first need to get a land loan or mortgage. And there are so many confusing terms and issues such as : Construction loans , Land Loans, Construction loan to mortgage…Where do we begin? any help would be appreciated. Thanks in advance!

  1. Reply
    January 31, 2014 at 9:00 pm

    You would need to find a lender that deals primarily with lending on land. Normally a lender in this business would only go a maximum of 60%, but normally closer to 50%, therefore you would have to provide the rest.

    You would have to look in your local telephone book or google land lenders followed by the state in which you reside. This would bring up several sites of which you would have to call as many as possible to obtain the financing you would want for your land purchase.

    Once you have purchased the land, banks would lend you money called a construction loan to build your home. One feature in this construction loan would be that it automatically convert to a mortgage loan upon completion of the construction and a certificate of occupancy has been issued.

    An issue with the construction lender would be with you building the house yourself. Most lenders would want a competent licensed construction firm to do the building of your home. You or someone in your family having a construction license would negate this, however, the lender might would want an independent construction company to over look the construction if you are in fact doing the building even with a license.

    I hope this h as been of some benefit to you, good luck.

    “FIGHT ON”

  2. Reply
    Alpha O
    January 31, 2014 at 9:45 pm

    Good morning and great question!
    As you’ve begun to find out, getting a mortgage these days isn’t a proverbial ‘rose garden.’ In spite of the many changes in that process and the kinds of loans that lenders are willing to write, here are some starter tips to help you go forward.
    In this day and age, the places that you’ll want to check in with to get a land loan include the financially healthy local community banks and perhaps the same type of regional banks in your area. Stay away from the big nationals. The reason for this is because the more local institutions that are financially healthy have a better grip on the machinations of your local economy and because they’re in good shape financially, they’ll be able to offer a broader product selection than the federally subsidized big institutions that are still wading through massive amounts of defaulted loans and problems that they’re trying to keep hidden on their balance sheets.
    Expect to put down somewhere north of 25% for a land loan in this economy. While it’s possible to find a bank willing to just let you put down 15-20%, it’s unlikely. Also, while the smaller banks are more apt to look at your overall financial situation, they’ll probably still want you to have good credit scores approaching or exceeding 700. Anything higher than 700 should certainly be ok. It’s also possible that a smaller bank may be more interested in making a loan to you if you have deposit accounts that you can bring over as well. (While I’m on the subject, I’ll digress slightly and say that if you don’t already bank with a smaller bank, they’re financially ‘green’ generally than than the big mega money center banks that have actually caused and contributed to the financial ‘crisis’….such as Bank of America, Wells Fargo, Wachovia and their likes…..the “too bigs to fail” as they’re called).
    Once you have a land loan, when you decide to build, you’ll get a ‘construction loan.’ Again this will most likely be from a local bank that offers this type of product. It can take two forms generally.
    1) Construction only – which means that they’ll finance the construction of the home and often pay off the land loan at the same time, but after the construction is complete, you’ll need to arrange for a more ‘conventional’ type of loan or what is called a ‘take-out’ loan which ‘takes out’ (ie pays off the construction loan. 2) Another variant is a Construction to Perm (CP) loan which during its construction phase has a certain term and rate and then once complete it ‘rolls over’ or ‘turns into’ a permanent loan. The reason for this is during the construction phase, varying amounts are advanced based on the draw schedule for your building and thusly the interest that you pay is variable based on those amounts and times. After all draws are complete and the building is done, the loan is modified and locked into prevailing rates.
    In summary, check with more local and regional healthy banks for both the land loan and the construction-perm. You may have to do a bit of searching, but get out the Chamber of Commerce directory to find these types of institutions. Also remember that just because a bank is local doesn’t mean it’s healthy. In fact, every Friday, the FDIC shuts down another 3-6 banks around the country. The key is to find a bank that’s both local AND healthy financially. You may even check with a couple of home builders or the home builders association in your area for some recommendations of banks that are in the market to make these kinds of loans currently in your area.
    Hope you found some of this information helpful.

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