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Posts: 550
Location: So. Illinois | I apologize this topic is not muskie related. Looking for some help on how to obtain a loan to purchase land. I occasionally see real estate related topics on this board and was hoping some of you could help out.
I have a close friend who wants to buy 60 acres in Michigan. My friend Ray lives in Illiinois so we are dealing with out of state issues as well. He is having trouble finding a bank or related company to obtain mortage to buy the property. When dealing with banks and mortgage companies, he is told that they don't deal with land purchases, just standard properties for a typical home / residence. Others are telling him they don't deal with property purchese above a certain acreage.
Trying to find out who he should be contacting to obtain a loan / mortage to facilitate this land purchase. If anyone can give me some feedback or has any POCs that deal with real estate I would greatly appreciate it. I can provide contact info at my end for me or for my friend Ray if anyone is willing to provide some assistance. THanks
Jerry |
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Posts: 65
Location: De Pere Wisconsin | What you have described is typical, my wife and I just bought a place in Vilas county and we live in wisconsin. We originally wanted land also. We ended up buying an existing "home" because it was darn near impossible to buy "land" unless there was a home being built along with it - a construction loan basically. We found it much easier unless you want a short loan with bad terms to buy a "house" and go from there....better loan rates, lenght of loan, amount down and so on. I saw a 60 acre spread with a farm house listed for 129k in the UP last week while scrolling through listings, so that would qualify and be pretty cheap I guess....also, the tax considerations are enormous when buying a "home" over land. |
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Posts: 1310
Location: Washington, PA | This isn't uncommon at all. Best bet is to deal with a local bank, and have a very high credit score matched with some equity elsewhere. |
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Posts: 317
| I own a mortgage company, and land deals are a totally different ballgame. 99% of loan officers will have no idea how to proceed. With a land purchase, be prepared to put more money down. typically 30% to 50%. Terms should be decent, probably in the 7% range. You may need to tie it in with another asset if you have no plans to build on it or if the land is rural. A local bank may be easier to deal with, especially with rural land because they will have experiance and a comfort level in doing local land purchases, but PM me if you need more info. |
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Posts: 232
Location: Sun Prairie, WI | PM sent |
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Posts: 75
| Check this out http://www.farmcredit.com/
They are in the business of making loans for bare land. When I was looking a few years back they have the best terms.
Being from out of state should not be an issue but plan to have 25% or more for the down payment.
Good Luck |
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| credit union credit union credit union |
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Posts: 317
| I didn't get your PM. Farmcredit is a good choice to look into, as well as a local credit union. If you need any questions answered or a deal looked, just let me know. I won't let a fellow Muskie guy get hosed on a deal. life chasing these stupid fish is hard enough.  |
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| I am dealing with a similar situation. I closing next week on acreage in Vilas County that I paid $52000 for. I looked around for a day and found the best deal to be from Associated Bank in Oshkosh. I have a credit score of 810 and got a 5/1 ARM amortized for 30 years but I will pay off over 15yrs(fixed rates are very difficult to get with land unless you want to pay a decent amount for the loan) at 7.3%. They are financing 100% percent of the loan and even the closing costs. I had up to $46000 that I could have used for the land but that money is in Stocks, and my monthly payment will come out of the stock account. But by financing 100% I do not have to drain the account. If you are interested in more info on the guy who did my loan at Associated Bank you can email me at [email protected]
Dave |
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Posts: 317
| that's an awesome deal! |
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| I would try to work with whatever bank you do your checkings/savings and other banking thru...mortgage companies don't do land deals...has to be a house on the properthy to get a mortgage...Try your local bank first! me 2 cents |
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| I own a mortgage company too and everyone is correct. Land loans typically are not done by mortgage brokers.
I personally got a land loan from my local credit union when I bought land 3 years ago.
I did get 100% financing on a 15 year term.
Your best bet is to talk to a local bank near the land and go from there.
Midge |
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Posts: 8863
| Mortgage companies in developed areas usually don't do land deals, and a lot of banks in your area probably won;t deal with out-of-state property. You have a few options:
1. Take out a home equity loan on your current house and use that to buy the property.
2. Call banks in the area you are purchasing the property. Chances are most of them have a "lot loan" program.
3. Go through a broker in the area
Down here a lot loan is virtually unheard of, but in Vilas its common. Some things to note:
1. You will likely have to get either an ARM or a Balloon mortgage. There really is no such thing as a conventional loan for an empty lot.
2. Interest rates vary between about 7.25% up to well over 9% -- shop around.
3. There is little flexibility on rates -- they are what they are no matter what your credit score is, or how much you put down.
4. Many banks require a 25% down payment or more for vacant land
Best advice I can give you is call your realtor, and ask them who they recommend in the area. Chances are they deal with someone who does this all of the time.
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| I talked to My Banker at Associated Bank in Oshkosh he would be more than happy to help any of you guys out if he can, he even said no problem for Illinois residents. His name is James Dietzler and his # is (920)232-9403. He is also about the coolest, most down to Earth banker I have ever dealt with. Good Luck, I closed yesterday and now own 6.4 acres right near High Lake. Dave G. |
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Posts: 550
Location: So. Illinois | I'd like to thanks everyone who has taken the time to respond to my post. This is exactly why I spend so much time on this board.... great people providing access to quality information in a friendly, easy to use format. I greatly appreciate all the assistnace.
R, Jerry |
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Question about land purchase - Obtaining Mortgage