[Greenbuilding] [BULK] Loans for land

[dantonioli at earthlink.net]

I was recently talking to a mortgage broker about this very issue.
Unfortunately, many lenders (banks, private, or otherwise) consider
"undeveloped land" as a higher risk, or at least know they can get away with
regarding it as a higher risk, and thus charge higher interest rates!

Private lenders will charge higher rates, but at least you'll get the money
you need to get the ball rolling. If you later develop the land and put a
single family residence you can then refinance to a lower rate. You can also
get a "construction-to-perm" loan, though apparently the "perm" rates aren't
as good with these packages....but, once again, you can re-fi later.

Also bear in mind that the more off-grid you are the more difficult it will
be to get a decent loan. 





Typically, banks are skittish about loaning money on land without
structures.  They call this "undeveloped" land, even though an orchard is
definitely developed.  If you expect income on the orchard, they might
listen to that argument, however that throws you into a business loan which
is a higher interest rate.  

Often people borrow against an existing house to buy raw land.  

You can also approach the seller about an owner-financed loan. I've unloaded
raw land this was successfully. 
 
 
Lawrence Lile, P.E., LEED AP


-----Original Message-----
From: greenbuilding-bounces at listserv.repp.org
[mailto:greenbuilding-bounces at listserv.repp.org] On Behalf Of Nick
Sent: Thursday, January 11, 2007 8:06 AM
To: Greenbuilding at listserv.repp.org
Subject: [BULK] [Greenbuilding] Loans for land
Importance: Low

I am looking at buying a 4 acre orchard off an old farm in New Mexico and
was a bit shocked at the interest rate and small percentage of the value

that they will loan at the local banks.

Does anyone have any insight and perhaps better ways of borrowing money for
land that they can share

Thanks

Nick 


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