Want To Buy Land? Compare Land Purchase Loans First
You have your dream house perfectly sketched in your mind. Picture perfect and on the exact location of that you always wanted. If you have found the land on which you wish to make that dream house a reality, and all you need is finance, a land purchase loan will provide you finance to acquire the land.
A land purchase loan is different in many ways from other types of secured loan, such as mortgages or commercial property loans. A land purchase loan can often require a great deal more information from the would-be borrower.
If you have good credit and some money available for a down payment, this can increase your chances of approval.
You may have a plan in mind for the development of the land. This can work in your favor when applying for a land purchase loan. Blueprints or a written proposal describing how you will develop the land can increase your chances of getting approved for various land purchase loans. You may even get your blueprints appraised.
Land purchases loans are separate from construction loans, so be sure to consider that when applying. The amount that you are approved for may cover most of the appraised value of the land, and not the cost of development.
So when you are comparing lenders, what should you be looking for?
Land values are fluctuating at the moment. Interest rates are falling but they could start rising at any time. Having a variable interest rate would make it extremely difficult to budget your repayments. On the other hand, having a short-term fixed rate can lead to an unpleasant shock at the end of the deal. For stability, find a lender who offers a long-term fixed rate.
Many lenders charge quite unnecessary fees – often known as pink fees. Examples are underwriting fees and document preparation fees. These give the impression of being legitimate but they are actually part of the normal process by the lender of getting your application approved. Alternatively the lender might inflate legitimate fees – for instance they might double the charge for the credit report or the appraisal fee. Obtain a run-down of the fees and costs before applying for your land purchase loan and avoid a lender where the fees are excessive.
Provided you have all your financial information to hand when you apply, it should not take more than 48 hours, or 72 at the most, to approve your application. Following approval, the appraisal process should take 1-3 weeks at the most and title 1-2 weeks. A good lender should be able to close your loan within three weeks of application. Many lenders pride themselves on a speedy turn-round so get this information in advance.
Obtaining a land purchase loan can be a good or bad experience depending on the lender. How good an experience it is often depends on whether the lender specializes in land loans or not. Just remember that you are in the driving seat. Make sure you get the land purchase loan you want, not the one the lender tries to push at you.
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