This guest post is courtesy of Land Line Lending.
Land lending can be a hard nut to crack. Buying a house is relatively simple. Banks lend readily for homes because individuals and families need places to live. It’s a primary mortgage and the mortgage will be paid off first in the event that the borrower defaults. Buying land isn’t a necessity. Sure it’s a great, low-risk investment. Of course, you can get enjoyment out of it while building memories with your family. Not to mention, it can be income-producing. Big banks just don’t seem to understand it. It’s a secondary loan, meaning that it falls lower on the totem pole than a home. This leads many banks to reject the idea of lending for land. Occasionally you’ll find a bank to lend on acreage but your interest rate will be higher or you borrow on an equity line using your home as collateral. It’s not entirely the fault of these banks. They just aren’t familiar with how land works. They can’t touch it like a house so it seems less marketable if they need to foreclose.
To help with this problem, Land Line Lending was created to simplify the process of lending for land buyers. We wanted fewer hoops and lower interest rates. Some stipulations are still in place, however. For instance, there is a minimum of five acres and $100,000 for a loan just as you might find with a traditional bank. The property can not have a home or building on the land unless that structure accounts for less than 50% of the value of the property. Land Line Lending wants to focus on the land being purchased. That’s our passion and where our understanding lies.
In closing, stick with a lending company that knows the product. This will save time and money in the long-run. Banks and mortgage brokers are great for homes because they understand them. Land Line Lending knows land!