The first thing many people think of when they see a Land for Sale sign is: Where will I get the money to buy it? Loans are a popular choice, simply because cash can be difficult to come by, or let go of if you have it. If you have never bought land before, you need to know a little about the different kinds of loans. Here is an overview.
1. Owner Financed Loans
When an owner finances Land for Sale, the terms are generally very easy and go through very quickly. The process of getting an owner-financed land loan is painless for the borrower. You usually do not need a credit check for the loan, and you do not have to keep paying for the entire length of time the loan was set for. If you can pay it off sooner, everyone is happy.
You may have to pay a small down payment, but the collateral for the loan is the deed to the property. Once you have set up the loan and paid the small down payment, you do not have to pay all the excessive closing costs to complete the process that you do with other types of loans. The loan goes through quickly and easily, and you pay a reasonable interest rate to boot.
2. Financial Institution Loans
When you get a loan for Land for Sale through a financial institution such as a bank or finance company, you have to jump through many hoops just to start the process. You have to fill out numerous forms about your income, finances, and taxes. You have to have a credit check and provide proof of employment. On top of all that, the down payment required may be a very large part of the overall cost of the Land for Sale.
A land loan through a bank can take as long as months to go through, and all the while you have your money tied up for the down payment. The interest rates can vary widely, depending on your credit score and other factors. If you want to pay off the loan early, you might have to pay a prepayment penalty. Some land loans with banks even have balloon payments that loom ahead the whole time you are paying your regular payments throughout the loan. These are all reasons that many people choose to buy Land for Sale with owner financing.