It’s important to know how the process works before you apply for land loans. Do your homework and make sure that you check your credit record for accuracy.
Provide all the requested information at one time. Make sure that you submit all necessary documentation at the same time. This will speed up the application process. You should be prepared to undergo thorough assessment during the application process.
Getting finance for raw land can be quite challenging. It requires a different approach than if you’re buying a house. Land loan lenders generally treat these loans like commercial loans so you should be prepared for higher interest payments as well as stricter qualifying criteria.
What land loan lenders expect:
Your first step should be identifying the land. You should then contact the local municipality to determine the zoning of the property.
You then need to get the approximate prices for installation of electricity, water and sewage systems. Put this information in your land loan portfolio which you’ll present to land loan lenders.
Get a general contractor to get you a rough estimate of building costs. Land loan lenders are more likely to provide finance if they see a statement of intent and plans for building a structure on the land.
Make sure that you substantiate reasons you should qualify for the loan. This type of finance is not easy to come by as land loan lenders regard it as quite risky. This is why interest rates are higher on this loan too.
Consider offering a substantial down payment with the offer. This may reduce your level of risk to the lender. You can expect to pay a down payment of between 20 and 50 percent when applying for a land loan.