Land Financing Options

[tmule88]

Hi guys. I am sure a lot of member on here have purchased land before and might be able to steer me in the right direction. I am in the process of purchasing a house on 65 acres of recreational ground and am looking at financing options. Fixed verses variable loans? Local banks verses larger organizations? Splitting it into 2 parcels and financing the house separate from the land? I am new to this and trying to evaluate my options to move forward. What have you landowners out there done in the past?

 

[Tim Hull]

A rec land loan is higher interest and usually balloons after 5 years. Best way I know is to mortgage with your house but talk with your lender. I was also required to have 20% down on my loan since it was rec land, but I just remortgaged my house to pay for the land since my house was almost paid off. Good luck. Owning your own property is the best way to go.

 

[Hardwood11]

Usually 25% or more down....5 year fixed rates are around 4.5%-5.5% right now....Farm Credit, Luana Savings Bank are two that I have used in Iowa and MN. You can look into 3,5,7 and 10 year locks...variable might not be a real good idea in this rate hike atmosphere.

 

[IowaBowHunter1983]

https://iowawhitetail.com/forum/thr...-vs-rec-land-building-home.56709/#post-628682

check this thread out.

Lots of options, but this is what I would do:

Split the parcel into two pieces. Ask your lender(s) how many acres you can have with the house and still be conforming (Freddie Mac/Fannie May compliant). These notes are the best rates because they can be sold on the secondary market. The acreage cap changed after the mortgage crisis. Finance this piece at 15 years fixed. Under 4% right now.

Finance the second parcel (balance of acres) on an ag loan. If you qualify for any USDA programs, even better. This rate will be higher than the note on the piece with the house so make this as small as possible.

This likely involves two different lenders to get the best rates.

Good luck.