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Land Lot Loan Programs

If you are ready to build your dream home, then you need to buy a place to build it. Lot loans provide financing for the purchase or refinance of land. Although there are combination loan programs that will finance the purchase of the land and construction costs, most of the time you will have to purchase the lot separately. It usually takes at least 6-8 weeks to hire a contractor, design and engineer plans and get them approved by the local building authority. Sellers are not usually willing to postpone the sale of a lot while you get the approved plans that a lender will require for "One-Time Close" loan which finances the purchase of the lot, construction costs and the permanent mortgage. The exception is when you buy the property from a builder who offers you plans that are acceptable to you. With approved plans, you are ready to qualify for a "One-Time Close" loan.

Lot loans are intended for people who are planning to begin construction in a few years. With terms of 2 to 5 years, they give you plenty of time to design your plans and hire a contractor. Payments during the term of the loan are for interest only and are amortized over 30 years.

Features of our lot loans:

• up to $1,000,000 loan amount
• up to 90% financing
• no application fee
• no up-front bank fees
• full or stated documentation
• debt to income ratio up to 45%
• fixed or adjustable rates
• amortized over 30 years

The available programs are: 

• 30/5 LIBOR ARM - interest only for 5 years
• 30/5 12 MAT ARM - interest only for 5 years
• 30/2 fixed rate - interest only for 2 years
• 30/5 12 MAT ARM - principal and interest balloon
• 30/5 6 month LIBOR ARM balloon
• 30/2 fixed rate balloon

Before you purchase a lot, it is a good idea to discuss your financing options for the entire project and to get prequalified for a loan.  

We offer refinances of lot loans on the same terms that are offered for purchase lot loans.

Call us today toll free at 1-800-438-2704 to discuss your project and to your financing options.

Tips on Purchasing a Land Lot 

Purchasing a lot is more involved than it appears at first glance. Here are some tips:

• Location

Location is the single most important consideration when choosing the place to build your dream home.  It will affect your use and enjoyment of the home, the amount of financing that is available for building, the cost of construction and the resale value of the home.  

If you have a family, then living close to schools, shopping and highways may be both a convenience and a necessity.  As well as affecting your lifestyle, the location will impact the construction costs.  Contractors generally include an additional transportation charge for sites that are in remote locations.  The location also affects the construction financing that is available to you.  Construction loans are limited by the future value of the home that is being built.  The valuation of the home will be determined by an appraiser who will review the building plans and based upon comparable sales in the area, prepare an opinion as to the future value of your home.  If you are building a sprawling English Tudor  in a neighborhood full of bungalow style tract homes, then it may be difficult to qualify for the large budget that you will need to build the home.

• Finished Lot 

The construction industry draws a distinction between land and a  "finished lot".  Land is property that does not have a structure on it.   A "finished lot" or "finished condition" generally means that the land is ready for building.  The city or county already approved the land as a separate parcel on a parcel map and it has road access and utilities to the lot boundary.  Unless you are in the business of development, it is better to buy a "finished lot" rather than incur the substantial costs of bringing roads and utilities to the land.

• Suitability of Lot

Whether the lot is suitable for the home that you are planning to build is an important consideration.  Before purchasing the lot, it is a good idea to visit the local building department to verify the zoning for the lot and for the home that you are planning to build.  For example, the zoning may not allow you to a build a two-story home on the lot.  Although you may be able to get a variance for your project, knowing that you need one may affect your decision to buy the lot.   Be sure to consider whether the slope of the lot is suitable for your project.  Although hillside properties may have great views, the costs of construction can be substantially higher than building on a flat lot.  It is also a good idea to check the set-back requirements for the lot and to ensure that it is not in a flood zone.  If the lot borders water, then you should check to see if there are limitations on the development of the lot. 

• Buildability

is important to evaluate the buildability of the lot before you purchase it.  In order to get a building permit issued, the lot will have to meet soil and grading requirements.  You should ensure that there are no soil contamination issues and that there is a buildable pad. Purchase contracts often include clauses which protect the buyer in the event that the lot is not buildable.  A title company and your local building departemt can assist you with identifying prior uses of the property to determine possible contamination.  Also, it is a good idea to ask the sellers for copies of any soils reports that were prepared.  Consult with your contractor regarding whether soils testing should be done as a condition to the purchase contract.

• Services

Check with your local building department to determine whether the lot has access to city water and the city sewer system.  If city water will not be available, then you will need to include the cost of drilling a well in your construction budget.  You may need soil tests to determine how far down you will need to drill for a well.  You will also need to install a septic system if the lot will not have access to the city sewer system.  Septic tanks will typically add $10,000 to $20,000 to construction costs and you will need to obtain soil tests to ensure that the property is able to support a septic tank.  In addition to water and sewer services, you will want to check on access to telephone, utility and cable lines. 

• Road Ownership 

Roads are either privately or publicly owned.  If the road for your lot is privately owned, then you will be responsible for maintenance costs.  Be sure to get a copy of the Road Maintenance Agreement from the seller so that you can assess your liability for future costs.

• Easements

Easements allow public entities and other homeowners to use your land for various purposes such as building roads and installing pipes and utility lines.  It is a good idea to inquire about easements before you purchase the property.  A title company can assist you with obtaining this information.

• Private Restrictions 

 Some properties are controlled by "conditions, covenants and restrictions" that limit the development and use of a parcel.  For example, buildings may be limited to a certain architectural style or a size limitations.  Ask the seller for a copy of the restrictions, which may also be obtained by a title company.

• Affordability

Before you purchase the lot, make sure that you determine all of the taxes and special assessments that affect it.  Some areas are subject to local as well as state property taxes.  In planned communities, there may also be provisions that allow special assessments to be levied upon certain parcels. 

Where to Finds Lots to Purchase

• Internet

The Internet is a good place to look for a lot to purchase.  A site that has extensive nationwide land listings is www.Realtor.com

• Real Estate Agents

Contact real estate agents in the area in which you are looking to purchase a lot.  Real estate agents work on a commission basis.  As long as you do not sign an Exclusive Buyers Agreement, you may utilize the services of different real estate agents at no charge.  If an agent finds a property that you wish to purchase, they will write-up an offer on your behalf and receive a commission from the seller.

• Classified Ads

Athough the internet is quickly replacing the traditional classified ads that appear in newspapers, there are still a large number of ads, particularly in the Sunday paper. 

• Drive Around & Look for Signs

Drive around different areas and write down phone numbers from for-sale signs.  Driving around gives you a chance to get a feel for different neighborhoods.