Have you ever found yourself wondering: can I finance land?
Luckily, you can. Land loans make this exact goal a reality, especially with purchases of larger acreages.
This land can be used for a variety of purposes. Whether it be for recreation, farming, hunting, timber, or just as an investment–buying 15 acres or greater can be financed with this option.
In today’s market many sellers want a pre-approval to come in with all offers. This allows sellers to see that you are a serious buyer and able to pay for the property that you are taking off a hot market. For agents, a pre-approval letter signals that they are investing their time into a search that is legitimate, especially with so many potential buyers in the market and limited time in the day.
For more information on land loans, how to finance your purchased land, and the pre-approval process, read on below!
Pre-approval Process for Buying Land
Generally speaking, the approval process for land loans is pretty similar to that of a traditional mortgage. However, there are stricter requirements in many cases as it is a riskier investment than a home purchase. There are many factors that go into land financing.
One example of this is the debt to asset ratio, which plays a heavy hand in determining your buying power in this purchase. Generally speaking, this should be 40% to 50% or lower.
Borrowers will also need excellent credit for a successful application. Consistent income is also a must.
It’s important to consider these factors in locating the right loan, as well as the lender when comparing options for land loans. You should look to a trusted source to ensure you can receive fair and favorable terms, with the trust and confidence you need in a financial institution for this type of transaction.
What Does the Process Look Like?
The pre-approval process is a simple process and typically does not require any verification documents. After filling out more information about yourself and what kind of loan you are looking for, you’ll consent to your credit history being pulled. You’ll also need to submit accurate totals of your assets and liabilities.
Pre-approvals can be calculated fairly quickly. If approved, you’ll receive a letter good for 30-60 days, depending on the lender. This letter can be used on any offers you wish to place.
This will make your agent and the sellers you are negotiating with feel more secure about the offer you are presenting.
Comparing Your Options for Land Loans
With this brief guide into land loans and the pre-approval process, you can start to get your feet wet.
When it’s time to take the next step in financing your land purchase. There are dedicated Client Care Coordinators waiting to answer your questions and provide the first steps in the pre-approval process.
To learn more and find out if land loans are right for you–contact us today!