Don’t Give Up on Finding Vacant Land Loans
Vacant land loans are sometimes hard to find, but don’t give up on your dream. They may be few and far between, but there are still some lenders willing to help.
If you walk into your bank or credit union, asking about a loan to buy a piece of undeveloped property, you might get an immediate rejection. Some lenders just don’t make that kind of loan.
You might not get an immediate rejection. The loan officer might take your application and pretend to listen to you talk about your dreams, while thinking about the next applicant and hoping that it is something simpler.
You may end up waiting for weeks or even months, before finally calling and finding that your package was rejected. It is the loan officer’s responsibility to present your package to the people that actually make the decisions. If he or she is not interested in obtaining the loan for you, then your chances of being accepted are very low.
That is one of the reasons that brokers are more successful at this sort of thing. They are ultimately working for you. They have more connections. If one lender says “no”, they have others to contact.
Some brokers can even pre-qualify your application for vacant land loans. So, you can go to the buyer with an offer, knowing that the money is available. There is really nothing that makes you feel more confident than a pre-qualification letter. You feel just a little closer to reaching your dreams.
What makes getting a loan for undeveloped property more difficult than obtaining a mortgage? It may seem like semantics, but mortgages are for houses, dwellings, a place to live today or in the immediate future.
A construction loan is for money to be used to build a home. Once the home is built, a mortgage can be obtained.
Vacant land loans are for buying pieces of property that you plan to build on later. It might be referred to as a pre-construction loan.
Nearly all banks do mortgage notes. Many of them do construction loans, particularly if they work directly with one of the planned communities. If you plan to do the construction yourself or hire your own contractor, it could still be difficult to get a construction loan.
Bankers feel that making pre-construction or vacant land loans is more risky. What if you decide not to build on that location? What if it is a part of your retirement plans and your plans change?
Most people realize that their plans could change, but they also understand their obligation to the lender. They realize that if they decide not to build, they are responsible for selling the property or continuing to make their payments. Those are creditworthy borrowers.
You are probably a creditworthy borrower, too. But, a bank might not be willing to put their trust in you. Don’t feel bad. It is not really about you. It is simply about the prevalent policy concerning vacant land loans. A good broker can help you find a lender with friendlier policies.
