These days more and more individuals are interested in purchasing a plot of land rather than an existing house. This decision can grant individuals design freedom, economic vitality, and peace of mind. However, purchasing and financing land also comes with its own array of challenges and hurdles. If you decide to purchase your own plot of land, it is likely the first challenge you will face will be navigating the vocabulary and characteristics of the land discourse.
After brushing up on your land fundamentals you will most likely also need to research and determine what type of land loan you need for your purchase. The type of land loan you will need may differ depending on if the land you are purchasing is raw, unimproved, or improved land.
When you are first getting serious about purchasing a property, you should be sure you are familiar with exactly what it is you are buying; this means staking out the land’s boundaries, understanding how it is zoned, and making sure it can be used to suit your needs. When staking out the boundaries of a plot of land it is best to use the expertise of a professional surveyor. These individuals will provide accurate boundary measurements that can then be provided to your lender.
As you double check the zoning and restrictions placed against the land you are interested in, it is important to also note if the land has access to utilities. This access can save you significantly and can make the land development process that much easier; especially when developing a residential property. After you find yourself familiar with the fundamentals of the land discourse and the characteristics of the plot of land you are interested in, it is time to apply for a land loan.
What is a Land Loan?
A land loan is simply a loan that is used to finance the purchase of land. The terms of a land loan, such as its interest rate and down payment, are typically determined by the land’s intended use. Furthermore, different types of land loans are also used for different types of land plots. The three most common types of land loans are:
- Raw Land Loan
- Unimproved Land Loan
- Improved Land Loan
Raw, Unimproved, and Improved Land Loans
These three types of land loans differ simply because each of the three types of land they represent differ in resources, access, and likely risk it will take to develop the land. The table below looks at these three land loans in more detail.
Land Loans and Financing Land in Summary
In summary, the best advice to follow when purchasing and financing a plot of land is to be prepared. You should know exactly what you are purchasing (boundaries, restrictions, and access associated with the land), understand what type of land loan you will need to purchase, and finally develop a clear and succinct plan for your land’s development and use. This plan will not only keep you on track and help you achieve your goals, but it may also help you secure a land loan in the first place. If you are currently looking for the perfect plot of land you can check out a variety of listings over at Land.us.