It’s no surprise that there are different types of land loans, and some have different lender requirements, developmental, and market risks. Here are some tips and information to help you sort through the different types, which have unique interest rates, down payment conditions, and other requirements.
Tip #1: Sort Through The Use and Purpose
You need to have a business goal in mind. Land loans are often for buying undeveloped land that can be used later for commercial or residential properties. The uses can also include recreational and farming purposes.
Undeveloped land usually comes with higher interest rates and down payments. There are several types to look at including raw land loans where there are no improvements or infrastructure. Another division is called an unimproved land loan where there might only be utilities. Finally, an improved land loan is another category which has utilities and roads.
Tip#2: Get Ready For The Additional Requirements That Come With Land Loans
If you’re looking for one of these loans, your business should be ready for some extra requirements. Top of the list is an environmental assessment. That’s a big one that many lenders require if you’re planning to use the land for a commercial purpose.
You’ll also need to have all of the zoning and permits in order and some Financial projections that include cash flow statements at the ready.
A land loan application usually requires a detailed development plan with timelines and construction plans included to get the funding.
OMJ Mortgage Capital Specializes in different types of financing solutions including land loans. we have access to a variety of different types of lenders and you can leverage our extensive network by getting in touch with us.
