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Lot and Land Loans

April 13, 2012 | Comments: 0 | Views: 128

If you have been looking for a residential mortgage to purchase a lot to eventually build your primary residence or second home on, you are not alone. Not only is there a lack of lenders that are lending on residential land but those that are have somewhat unfavorable terms. The market is seeing high interest rates and low loan to value ratios.

If you are lucky you can find some local and even a few national lenders that are lending on Residential Land with decent terms. I am aware of one national lender that is lending in 38 states with Loan to Value Ratios as high as 80% and interest rates starting in the 3 percent range. It will take some searching for this however. Most local lenders consist of credit unions. The majority of these credit unions are offering interest rates in the 6 or 7% range. Also you will see loan to value ratio requirements at around 60%.

After performing extensive research on what is out there I am finding that the best deal is 20% down and an interest rate in the 3% or 4% range.

Closing costs typically run at about 1 to 2% of the loan amount. You will have to pay the lender fee, the appraisal fee (which averages around $400 to $600 depending on the size of the loan and title fees. Title fees are generally regulated and should be the same regardless of which title company you end up using.

So if you can come up with a 20% down payment, show good income with debt to income ratios at no higher than 45% and 6 to 9 months of liquid assets in reserve equal to your current mortgage debt and finally a credit score in the 700's you should be able to qualify.

I think there has been no better time to buy residential vacant land. Owners of residential land are still hurting from the massive price drops that they suffered. I believe that residential land is perhaps the most affected by the Real Estate crash since so many mom and pop investors were buying land with the hops of flipping it. Now many of those investors are desperate to sell their land which they cannot rent and on which they are paying yearly taxes on if not a lot of mortgage interest.

Now is the time to find your dream lot and with some good lenders still out there offering cheap lot lending options you should be able to make this work.

Source: EzineArticles
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