Understanding Down Payments for Land Loans

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Planning to make a land purchase? Unless you’re going to be paying entirely in cash then you’re going to need to secure a land loan—and that’s going to require a down payment. Down payments for land loans operate a bit differently than down payments for traditional real estate purchases though, and it’s important to understand what’s expected of you so that you can be sure to find a plot of land that fits within your budget. To help you do the math, we’ve broken down some of the key factors to know about down payments for land loans.

How Much is a Down Payment for Land?

Generally speaking, a lender will require anywhere between 20% and 50% of the purchase price for land in order to secure a loan. Why is it so high? Land is considered a riskier investment than houses and other structures, and lenders want to be sure to get as much principal up front as they can. That being said, it is possible to find lenders who will allow you to get funding without putting so much down. If you’re on the hunt for one, work with a mortgage broker so you can be sure you get a full view of all of your available lending options.

Factors That Affect Your Down Payment Amount

You won’t know exactly what your lender is going to request as a down payment until you speak with them, but there are some factors that may suggest your down payment will be higher or lower on the spectrum. For example, down payments for raw land tend to be higher than down payments on improved lots or land that you intend to immediately build on. Your previous lending history may come into play here as well.

Remember: it comes down to risk for the lender. The more risk they think they’re taking on, the more money they’re going to require from the buyer up front. Raw, unimproved land is perceived to be riskier, and as such, you can reasonably expect your down payment to be higher.

What About Interest Rates?

In most cases, the higher your down payment for a land loan the higher your interest rate is going to be too. While it might not seem fair—after all, you’re taking on less interest to begin with—lenders don’t see huge dollar signs when providing loans for raw land. A lot can happen between the purchase of your land in an unimproved state and the plans that you have for it, and you’ll likely need to come up with a large amount of additional funding to get your raw land to a profitable state. As a result, lenders tend to tack on higher interest rates to these high-risk loans to ensure that they get as much of a return as possible.

So what’s your best bet for getting a good deal on your down payment? Go into the lending process with a clear and concise proposal about your plans for optimizing your land investment, including the direct steps that you’ll take to get there. The more you can prove to a lender that they’re making a smart choice lending you the money, the more favorable your loan terms should be.

By Laura Mueller

Everything to Know About Road Access

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If you’ve been searching for land for a while you’ve likely come across listings that talk about road access time and time again. But what does that actually mean and why is it so important? We’ll break it down for you.

Don’t Get Landlocked

When searching for land to buy you don’t want to get stuck in the middle, surrounded by properties owned by other parties leaving you unable to freely access your own land. In order to avoid buying landlocked property you should have an idea of the different types of road access to make the best decision based on your needs.

Generally, access falls under one of three legal categories: public access, un-deeded access, and deeded access.

Which One Do You Need?

Public access is the easiest to look at, so we’ll start there. This is property that touches a government-maintained road meaning you won’t have to cross any other person’s property to get to your land.

Un-deeded access is essentially the equivalent of being landlocked—you’ll have to cross another party’s property to access your land. To reach your land you will have to cross a road or trail owned by another person; or maybe there’s no road at all. There is likely an existing path that people have always used to gain access to the property, but there is NO written legal agreement. While this may have worked for previous owners it can complicate easily and quickly, unfortunately un-deeded access may not be the best route.

As you could probably guess, deeded access is just the opposite of un-deeded access. There is a formal, written agreement with adjoining landowners that gives you the freedom to cross the road to reach your land. Land with deeded access poses no potential issues for investors and will protect you as it’s usually recorded in the local courthouse.

Why Does It Matter?

While every state has their own laws regarding land, for the most part you want to avoid getting mixed in with un-deeded access. Doing so could result in issues with running utility lines, water or pipe lines across properties or even the lack of an easement. Investing in land with un-deeded access could actually prove to be more trouble than you’re looking for, but with that being said there are exceptions to every rule.

If you are intending to use your landlocked property for hunting or growing timber you can typically get access granted easily, either by the adjoining property owners or the state. However, contention with neighboring property owners could lead to costly legal battles and a lot of wasted time.

How you plan to use your land could make all the difference in the road access debate so make sure you have a clear idea of what you want before you start looking for properties or at least before making any offers.

By: Caroline Kirby

3 Things You Need to Know About Unrestricted Land

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On its face, unrestricted land sounds like a pretty great investment. Having the ability to do whatever you want in terms of building and maintenance on your land, without the oversight of a homeowner’s association or village regulations, is the dream after all—right?

Here’s the thing: unrestricted land does have a lot of benefits, but it’s not necessarily a free for all. Below, we’ll go over three things that you need to know before you purchase unrestricted land so that you can ensure you make a sound investment.

1. “Unrestricted” Doesn’t Necessarily Mean You Can Do Whatever You Want

A plot of land might not have any direct restrictions handed down from a homeowner’s association or local municipality, but there is still a strong chance that it has certain deed restrictions, easements, or zoning regulations that will place parameters around exactly what you can (and cannot) do.

So what might this look like? Deed restrictions and easements can limit where you place a structure on your property and what type of structure it is. Zoning regulations, meanwhile, can effect everything from what you use your land for to the design features of any structure on its grounds.

Before closing a deal on unrestricted land, be sure to check for additional limitations that may require a change of plans.

2. It’s On You to Double Check That a Property is Truly Unrestricted

Land sellers love to note that their property is “unrestricted” because it appeals to a wider range of buyers. However, just because the word is in the listing doesn’t mean that it’s true. The onus is on you—the buyer—to check up on exactly what restrictions are or are not placed on the land and to verify the seller’s claim.

Work with your real estate agent to conduct thorough research on any unrestricted property you’re seeking to purchase, even if the seller’s claim seems legitimate. And again, be sure to check not just for general restrictions but for deed, zoning, and easement restrictions as well.

3. Your Neighbors’ Probably Have Unrestricted Land, Too

There’s a flip side to every coin, and in the case of unrestricted land, it’s that the properties around you are likely going to be unrestricted as well.

While it won’t have a direct impact on how you use your land, it’s definitely something to consider if you’re worried about aesthetic cohesion. Restricted land typically comes with distinct design and upkeep rules that all property owners must follow, which in turn creates a uniform look that helps distinguish communities and keep them looking their best.

With unrestricted property, it’s every owner for him- or herself, and that can lead to some incongruous structural designs. It also means that you won’t have any recourse if your neighbor stacks a bunch of old and broken furniture in their front yard, or if they fail to maintain their lawn.

Your best bet for enjoying all of the benefits of unrestricted land without suffering the drawbacks is to do as much research as you can before you buy so that you don’t have to worry about any surprises later on. While you’re at it, talk to your local Building & Planning Department about your own plans for the property to make sure that you’ll be good to go.

By Laura Mueller

Buying Waterfront Property: 5 Due Diligence Tasks Before Pulling The Trigger

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Buying a home is a dream come true for many.

To purchase that property with river, lake, or oceanfront access may top the list for many individual’s American Dream.

From personal relaxation, giving your family all that waterfront property has to offer, and the possibility of major returns on investment, it’s hard not for the pros to outweigh the cons.

But before plunging into buying your dream house, just take a few minutes to consider these challenges surrounding the purchase of waterfront property.

Observe the Property Closely

When it comes to buying a waterfront property, the most important thing to consider is the land  and not the house or structures currently on it. Altering the structure is easy, but the possibilities of altering the land itself is much more complex.

The land itself can have many impeding factors for existing or future development, so don’t hesitate to hire talented engineering, ecological or soil experts to evaluate your potential purchase.

In addition to the land itself, make an effort to learn more about the surrounding areas tourist activity, potential neighbors’ use of the land and water, and any future development. The last thing you want after a waterfront land purchase is to find out your plans and investment are hindered by factors out of your control.

Check Insurance Requirements

Unlike normal land or homes, waterfront properties often come with their own set of insurance requirements. Some factors mentioned above can have outsized effects on your homeowner insurance premiums, as well as additional flood insurance costs.

You can get more details from the National Flood Insurance program here.

Even though the amount may vary, it is always better to be covered when a massive flood causes thousands of dollars damage to your home.

Another type of insurance that you might be wise in investing in is wind insurance. Your properties geography and the makeup of the surrounding land mass may cause increases in wind speeds.

All of these insurance requirements can be estimated with early due diligence on your potential waterfront investment, so begin diving into pricing them out as early as you can.

Check Legal Factors & Requirements

Waterfront property often comes with additional legal factors to consider, depending on your planned use or activities on the land. Understanding these legal factors will save you time and headaches, so don’t neglect this due diligence task.

Your State government will have guidelines and laws around building additional structures like docs, sea walls, boat houses and even guest houses.

Hiring a reputable real estate lawyer will give you give you piece of mind and help guide you while planning for this investment.

Assess The Value Of The Waterfront Property

Although this might be the first thing you consider before investing in a piece of waterfront property, you might do well to check on the first three tips first. Each may have a significant effect on the value of the property, which will help you decide whether to purchase the land or even provide you with additional information for price negotiation.

Oftentimes the value can depend on the availability of water sports activities, proximity to the waterfront, and even distance from municipalities, stores, schools, etc…

Put major effort into assessing the value of your potential waterfront land, the existing structures, and the surrounding property values and you’ll save yourself from losing money on the investment.

Hire a Real Estate Agent                                                                         

The right real estate agent can provide intangible knowledge and support during the entire investment process, so don’t balk at finding the right help.

Local knowledge, connections, and even friendly repartee amongst the homeowners and other real estate agents can all be contributing factors to a successful property investment. Hiring the right agent will also save you a lot of time and effort in the long run, so take the opportunity to hire the best agent you can find.

The tips above are only the beginning of the necessary due diligence when investing in waterfront property, but starting with these five will get you off on the right foot. To learn more about properties in your area or to discover great waterfront land across the country, click here to search LandHub’s property listings.

Courtesy of LandHub.com

MOSSY OAK’S PARTNERS IN CONSERVATION

Mossy Oak official camo of conservation

Mossy Oak has two basic philosophies: live your best life in the outdoors and leave it better than you’ve found it. Mossy Oak began as a camouflage company 34-years ago in West Point, Mississippi, and was founded by Toxey Haas when he introduced his first camouflage, Bottomland. Since that time, Haas Outdoors has become a multi-faceted company dealing with almost everything to do with the outdoors and an outdoor lifestyle through its Brands. Mossy Oak Brand Camo, Mossy Oak FishingBioLogicNativ NurseriesGameKeepersGameKeeper KennelsMossy Oak PropertiesNativ LivingMOOSE Media and Mossy Oak Golf

Bill Sugg was the first employee of the company and has worked and contributed to its growth in many capacities, including as a salesman, production manager, vice president of operations and for the past 10 years as president of Haas Outdoors – doing whatever needed to done. Haas Outdoors has a vital concern about the conservation of land and the animals on it, as well as how that land’s used. A primary focus of the company has been helping young people become more involved in the outdoors, including people with special needs and anyone wanting to learn more and become a part of the outdoors heritage we share. 

Here are some things you may not know about Mossy Oak and the numerous endeavors the company takes to improve outdoor experiences for everyone. 

Editor: Mossy Oak has partnered with and helped support many conservation organizations. Can you tell us about them?

Bill Sugg: Mossy Oak believes in its stated vision, which is that Mossy Oak’s not just passionate about the outdoors; we’re obsessed. We live and breathe the outdoors – hunting, fishing, conservation, stewardship and legacy. Every acre cared for, river restored and species managed can’t be accomplished without working together. We believe it’s Mossy Oak’s duty to try to leave things better than we’ve found them for future generations.” And, those conservation goals are also reached by Mossy Oak working with and becoming the official camouflage for conservation organizations like Ducks Unlimited, the National Wild Turkey Federation, the Quality Deer Management AssociationBassmaster, the Coastal Conservation Association, the Bonefish & Tarpon Trust and growing.

Editor: What’s the future of Mossy Oak as you see it right now?

Sugg: Mossy Oak wants to continue to be able to couple our company’s business initiatives, products and licensees with the knowledge needed to join the mission of our company and to move forward in being a leader in conservation. We want our Brand and our messaging to be about everyone’s best life in the outdoors, however that looks for individuals, and all that’s embodied in that statement. We want everyone in our reach to join us in the outdoors and conservation movement.

Editor: What do you see as the future of hunting as we know it?

Sugg: I don’t know for sure what the future of hunting will be. But I do know that the values of hunting have and always will be with us, including: quality time spent with family and friends afield; how to take care of and preserve the land and its wildlife and fisheries for future generations; and how to build bonds with people who have introduced you to the outdoors and helped you learn outdoor skills. We know that it is through hunting that individuals learn the importance of conservation and land management to preserve and grow what God has given us. We have to all be more conscious of introducing more people to the blessings we’ve received from living our lives outdoors.

Editor: Mossy Oak is an unusual company, since all of your employees participate in hunting and fishing, don’t they?

Sugg: Yes, we are. Almost everyone in the company has a passion for hunting and fishing and enjoys the great outdoors. We even have a rule at Mossy Oak that someone applying for a job need not put down that they turkey hunt, because we all understand how a gobbling turkey may keep you from getting to work on time. We’ve noticed that sometimes lights at the Mossy Oak headquarters don’t come on as early in the morning during turkey season as they do during other times of the year.

Courtesy of Mossy Oak – Your Obsession

Pulse: Land Buyers Plan First, Shop Later

Pulse: Land Buyers Plan First, Shop Later

The October LANDTHINK Pulse revealed that 34.3% of respondents explore financing options before they begin searching for land. That’s right, potential buyers are doing things in the right order to help ensure a more successful land buying journey. Land is usually bought with cash and a loan, with the buyer paying a decent amount of cash down and financing the remaining balance. Once owning land has piqued their interest, many aren’t quite sure what they should do to get the ball rolling. Searching land for sale is a fun, exciting venture, but it’s easy for buyers to get caught up scouring online land listings and procrastinate the boring paperwork for later. But unless you’re paying cash, obtaining pre-approval for a land loan is a critical first step toward the goal of land ownership.

Although many people use the terms pre-approval and pre-qualification interchangeably, there’s a big difference between the two. Pre-qualification is generally a quick process that involves obtaining an overall picture of your finances from a lender. Pre-approval requires documentation such as tax returns, bank statements, and current assets and debts, and includes a more thorough investigation into your financial background. Buyers should also lay out their plans for the land to the lender. Only one — pre-approval — puts you one step ahead of the land buying competition.

There is, however, a good reason real estate agents emphasize the importance of getting pre-approved before beginning your search for land. A pre-approval is beneficial in many ways and will save you time, money, and frustration. Professional land agents make sure they spend their time wisely, and they’re eager to work with a buyer who has their finances in order. Taking the necessary step to obtain pre-approval shows sincerity on the buyer’s part, and proves they are credible and able to act fast when an agent finds the piece of land they want to purchase.

Obtaining pre-approval also strengthens your offer to the seller and the seller’s real estate agent. If a landowner is eager to sell, they may be more willing to accept a lower offer from someone they’ve been assured is financially capable of following through on the purchase.

Courtesy of LandThink: Pulse

Thoughts on Timberland Discount Rates and the Coronavirus

Thoughts on Timberland Discount Rates and the Coronavirus

In a February 2020 post related to timberlands and the coronavirus, I noted, in reference to U.S. Treasuries, that “a low risk-free rate expresses market pessimism and concern rather than economic health, stability and the potential for rapid growth.” Then, on March 3rd, the Federal Open Market Committee (FOMC), the branch of the Federal Reserve that oversees the money supply and interest rates (monetary policy), decided to reduce its target range for the federal funds rate by ½ percentage point (50 basis points).

To me, the FOMC press release, which opened with “the fundamentals of the U.S. economy remain strong,” read like the “feedback sandwich” in a poorly conducted performance review. “Hey Percy, let me start by saying you showed up to camp in great shape. But we’re sending you back to the minors. Keep up the good work!”

Markets responded similarly. The S&P 500 ended the day 3% lower and U.S. 30-Year Treasury yields closed at 1.64%, down 29.6% since the start of 2020. The rate change signaled worry about recessions. And it generated questions from timberland investors.

Timberland Discount Rates

“Should we lower or increase our discount rate when valuing these assets?” asked the timberland investor, testing impacts from the coronavirus on trade, U.S. economic growth and asset values.

Discount rates basically represent the sum of a benchmark “risk-free” rate and a risk “premium.” The premium may be comprised of two parts: firm or asset class-specific risk (diversifiable) and market risk (affects all investments). For example, the Southern Pine Beatle is a risk specific to timber, while economic recessions affect all sectors. For timberland, 30-year U.S. Treasuries often serve as the risk-free rate.

The investor then asked, “wouldn’t I be better off using a long-term average U.S. Treasury rate, closer to 3%, to reflect normal times or higher inflation rates for my risk-free rate?”

Generally, the answer would be “no.” U.S. Treasuries and the risk-free rate represent a baseline opportunity cost. You can put uninvested monies in existing U.S. Treasuries, not into bonds earning hypothetical, historical ten, twenty or thirty-year average yields.

What can you do? Over nearly twenty years of teaching finance classes and workshops, I always discuss with students the importance of spending the marginal minute on confirming and strengthening our understanding of potential cash flows over fine tuning the discount rate in discounted cash flow (DCF) analysis.

Tweaking and theorizing over the appropriate discount rate, like checking email, provides a false sense of productivity and control. Nailing down, to the extent possible, our expected costs and revenues creates more value and addresses directly our key assumptions.

Courtesy of LandThink

THE CASE FOR RURAL LAND DURING COVID-19

Rural Property

If you are like us at Mossy Oak Properties, the thought of being quarantined during a pandemic like the current COVID-19 crisis is made more bearable if you have a place with a little dirt and grass under your feet to do so. It’s currently turkey season around the Mossy Oak neighborhood, and we are doing our best to practice social distancing while pursuing our favorite quarry. It seems based on social media, turkey hunters in states that have open seasons are following suit, but we also see many families getting outdoors to fish, hike, or just breath some fresh air.

As a result of the current pandemic, the “outdoor lifestyle” may be more en vogue coming out of COVID-19 than ever before. People may have an increased desire to have their own farm or cabin in the country to get out of the congested urban areas.  Families may start to realize a simpler dream in Rural America is truly the American dream. Simply put, the rural land market may be a benefactor from the current crisis.

While COVID-19 – and its accompanying economic slowdown – is certainly concerning, optimism abounds that this will be short-lived and our economy will rebound quickly due to strong fundamentals prior to the pandemic. Through February and even into early March, the rural land market was as strong as anytime in the past two decades, and barring a prolonged slowdown, the desire of many to own a piece of their own land will likely not wane, but only be enhanced due to the stock market rollercoaster and the increased allure of “fresh air” due to the quarantine experience.

Two factors that are especially important to consider regarding the future of the land market are historically low interest rates and low gasoline prices. In looking back at the 2008-2010 recession, both of those factors were considerably different than what we face at the current day.  Why does this matter?

If money is “cheaper” to borrow due to lower interest rates, consumers are more inclined to finance a purchase such buying a farm or rural cabin.  In 2008, the average 30-year fixed rate loan according to Freddie Mac was 6.03%. Currently, BankRate.com is showing 3.78% for the same loan type.  These interest rates will prove to be very enticing for buyers coming out of the COVID-19 crisis who know how valuable and life-changing a land purchase can be.

In 2008, the average price per gallon of gas in the US was $3.25 a gallon. As of March 26, 2020, the average price per gallon of gasoline per AAA is $2.06 per gallon-and continuing to fall. Not only does a reduction in gas prices mean more disposable income for consumers, but for a rural land buyer it may give them more confidence to purchase a property that is a little further away from their primary residence.

Oftentimes, the price of gas can be prohibitive, especially for buyers that are purchasing properties that are an 8-plus-hour drive from home.  This is one primary reason (along with big deer, of course) why states like Ohio became very popular with East Coast whitetail hunters that had traditionally bought land in Illinois; for many the drive was simply too far with those gas prices, and with a more than suitable substitute much closer to home.

When you add these two factors to the aforementioned “rural escape” mentality that may be prevalent after this crisis, as well as the possibility of some price improvements on current rural land inventory, the golden era of land buying may very well be upon us. While we don’t have a crystal ball to guide us on the length of the crisis and its impact to personal wealth, the fundamentals for a roaring comeback for the land market are certainly in place. To summarize, be ready to buy when the opportunity presents itself!

To begin your search for a piece of rural land, or to sell a property through our nationally-acclaimed network of land specialists, visit www.mossyoakproperties.com.

The Mossy Oak Properties land brokerage network was launched in 2003 and has since grown to over 100 franchised brokerages in 28 states throughout the country, with our network completing 3500 transactions totaling $750M+ in sales volume for 2019.  Selected as a national “Best Brokerage” for 2019 by The Land Report, our network also had forty groups named as recipients. For more information, visit www.mossyoakproperties.com.

Courtesy of Mossy Oak Properties

FIXED OR ADJUSTABLE RATE: WHICH IS CURRENTLY BEST?

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For most land buyers, purchasing rural property means taking out a loan. And while this process comes with plenty of moving parts to consider, one of the most important decisions will likely be choosing between a fixed and adjustable interest rate.

The obvious question is: Which is better? Like with most issues surrounding rural real estate, that answer is not as simple as it may seem.

“It depends on the buyer’s plans for the property,” according to Gary Blair of Southern Ag Credit. “Also, consider if you will be cutting timber and paying down the loan early. Long-term and for piece of mind, a fixed rate may be best going forward, however, my customers who picked an adjustable rate the past five years would have paid 2 percent on average below fixed rates. That saving may diminish soon if rates rise as projected.”

Understanding the basics
Just like its name implies, a fixed-rate mortgage provides land buyers with a set rate of interest that will not change throughout the life of the loan. This can make it much easier to plan ahead for payments, and therefore stick to a budget in the rest of your life.

Meanwhile, adjustable-rate mortgages, also referred to as variable-rate, can change based on a number of factors. While they can fall, they may also suddenly rise, leading to more expensive loan payments.

Deciding which is the best option comes down to a combination of personal circumstances and what the future has in store.

“Interest rates have been at an all-time low for the past four years,” Blair continued. “The experts expect rates will begin to rise. Adjustable or variable rates are usually month-to-month rates based on LIBOR or prime, and are expected to rise. Most lenders do not offer long-term fixed rates on land financing, however, you can obtain rates locked for three-, five-, seven-, 10- or 15-year terms. These rates are also very low. Look at your finances and lock a rate to match you plans for the property. Most land loans pay in full in seven to nine years. The buyers prepay from earnings, sell and buy a larger or different tract or [refinance] in a shorter time than home mortgage loans.”

Based on the current market, Blair stated the best option may be a five-, seven- or 10-year fixed rate.

Beyond interest
While securing a low interest rate can be a vital part of getting a good deal when buying land, it’s not the only factor to consider.

“[Land buyers should keep in mind] upfront costs such as origination fees, attorney fees and appraisal costs,” Blair said. “These fees will increase your effective rate.”

It’s also a good idea to explore options that can help lower costs. Individuals investing in land may be able to call on special programs, for example.

“[C]onsider using a private cooperative (Farm Credit) financing option,” Blair continued. “The stock purchase requirement of the Farm Credit lender in most cases will be offset by the patronage payments. Some Farm Credit lenders are paying a patronage equal up to a 1 percent rate payment. If your rate is 5 percent, then a 1 percent patronage payment would reduce your effective rate to 4 or 4.25 percent depending on the rate terms. The Farm Credit lenders specialize in financing land outside the city limits and provide expertise with rural property financing.”

By having a land specialist in your corner when buying and an experienced loan provider when borrowing, you stand a much better chance of saving money and walking away with a tract of land you can be proud of.

Courtesy of Mossy Oak Properties

WHY FINANCING LAND IS A GOOD THING

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Financing is often the only way people can purchase expensive things. Instead of having to pay $30,000 on the spot for a car, a person will finance the purchase, allowing them to make payments over a long period of time. And finally, after all the payments have been made, the vehicle is theirs.

Those buying land are offered the same advantages. Where they would otherwise be unable to afford a tract of land, financing makes it possible. So how does it work?

There are plenty of options
There are a number of options when it comes to financing land. The person selling the land could be the one offering financing. However, this typically means a buyer will be required to offer a large down payment – ranging from 20 to 50 percent. The financing terms will include how long a loan will last, the interest rate, payment schedule and balloon payments. This option does allow some flexibility, as a buyer can work out particular terms with a seller.

Another way to finance land is through a large bank or mortgage institution. This will require a land buyer to apply for a loan. In order to improve their odds for qualifying for a loan, a buyer should ideally have a good credit score, or else they might face a higher interest rate. In addition, they will want to lay out their plans for the land. For example, if they are buying farmland, they’ll want to draw up their vision for the land and how they’ll make monthly payments. A sounder plan could make all the difference to obtaining a lower rate, not to mention qualifying for the loan.

Aside from big banks, local banks and credit unions will also offer financing, which is typically a more attractive option for buyers, as these loans are easier to qualify for. Since these financiers are local, they’ll be more familiar with the area, the plot of land and the overall community. That means a buyer will want a sound strategy for their plans for the land in order to appeal to these lenders.

“Financial institutions such as ours can offer competitive rates and terms to the borrower,” said Austin Outlaw, a loan officer at First South Farm Credit. “We are fit to meet the needs of timber owners, farmers, and anyone else seeking financing for ag-real estate, equipment, cattle, or farm improvements. Repayment can be scheduled to meet the needs of the borrower.  For instance, farmers usually have seasonal income and would be set for annual installments rather than someone w/ a salary position who would be set up for monthly installments.”

Outlaw added that interest rates for a tract of land are low by historical standards, making the time ripe for a purchase.

Another option for buying land is using a current residence as collateral to obtain a loan. This is known as a home equity line of credit for a land purchase. Using the equity on a home can allow a borrower to get a better deal on a land purchase.

The details of a land loan
No matter what way someone is financing a land purchase, there will be a number of terms to consider. For one, borrowers will face less availability and options for land loans than, say, home loans. This could make finding the ideal terms and tract of land tough, so hiring a land broker is likely the best option before shopping around.

Aside from a down payment, buyers will have to meet minimum monthly payments throughout the life of their loan at a set interest rate. These rates can vary greatly depending on the loan.

Without financing, many land owners would have never been able to make a purchase. Those wanting to make a purchase are encouraged to get started with the process from reputable land professionals.

Courtesy of Mossy Oak Properties