Financing raw land is trickier than your standard home loan. With home loans, the lender holds the house as collateral, meaning you’re less likely to skip town if you want a place to live. Whereas raw land can be easy to walk away from if you suddenly run out of money, thus leaving the lender to pick up the check. But financing raw land isn’t impossible. In fact, there are several options out there. But before you skip on down to the local bank and ask for a handout, check out The Best Options for Financing Raw Land:
National Bank
National banks are a picky bunch. They aren’t particularly interested in local economies and have a hard time seeing the trees through the forest. That’s why most big banks won’t offer up the goods to get you the land you want. It’s just too risky for them without a lot of payout. This is why raw land is the hardest type of property to borrow against. With national banks, you’ll likely find a lot of small print hidden in the terms.
Typical terms:
- Credit Score – Must have a credit score of at least 680 or more.
- Down payment – Must pay 50% of the property price up front
- Small print – Adjustable rate mortgage with built-in balloon payment in addition to down payment. No guaranteed interest rate. No guaranteed loan. Apply and cross your fingers.
The bottom line: Financing raw land through a national bank is an okay option if you can get the approval. Fingers crossed!
Credit Union
One of the perks of financing through your local Credit Union is the fact that they’re local. They know the area and its real estate values, and they have something to gain from a growing economy. However, like most banks, they can be stingy with their money. They’re also a tad controlling as to what you do with it when they loan it out. So when you apply for a loan on your raw land, the first thing they’ll want to know is exactly what you plan to do with your land. Will you build a house, open a business, run a farm? They’ll also ask for approved plans from a builder and will want final say in the end.
Typical terms:
- Credit Score – Must have a credit score of at least 650 or more.
- Down payment – Must pay 50% of the property price up front
- Small print – 12% interest for perfect credit score applicants. For those with less than perfect scores, interest can be 14% or higher. Loan must be paid off within one year and all building plans must be finalized before loan approval.
The bottom line: Financing raw land through a credit union is a better option if you have a clear vision in mind and a perfect credit score to offer up to the banking gods.
LandCentral
Ah, LandCentral. We’re like a financing breath of fresh air. Not only do we see the value in raw land, we make it our mission to ensure everyone has an equal shot at their own piece of the American dream. None of this credit score, show us your plans nonsense. Everyone is pre-approved from the moment they click on a property. And we’ve got land spread across 50 glorious states, so we know you’ll find something to your liking. Consider it owner financing at its finest.
Typical terms:
- Credit Score – No credit check. You’re pre-approved, remember?
- Down payment – $149 (yep, that’s it)
- Small print – We believe in equal opportunity lending. That’s why we offer just 9.7% interest for everyone. Yes, everyone. Oh, and no payment penalties, ever. How’s that for small print?
The bottom line: Financing raw land through LandCentral is your best option. It’s safe, affordable, guaranteed, and it comes with a variety of land opportunities. But don’t take our word for it. See for yourself!