We don’t blame you, sometimes it’s easier to build your dream home than it is to find it on the open market. For that very reason we have lot loans. Most people assume that you must go out to the rural countryside to buy a lot on which to build your next masterpiece. That couldn’t be further from the truth. We’ve done lot loans in thriving metropolitan cities, deserts, lakes, mountains, ski resorts, and the ultimate beach house. Whatever your dream, let us help put it all together.
A lot loan is basically that, a loan that a bank or lender offers and it’s securitized by the lot that you are purchasing. These loans are given to borrowers that intend to build a primary or secondary residence. The idea is that you will buy the lot with the intend of building your dream home on it.
Yes. A lot loan is different from a construction loan because the lot loan pays for the land that the construction will take place on. A construction loan is money the finances the actual construction of the home including manpower and materials. If you plan on financing both the lot and the construction of the home, you will more than likely carry two loans. One for the lot and one for the construction of the actual home. Once the construction is complete and you receive the certificate of occupancy from the city or county inspector you have the option of refinancing both the lot loan and the construction loan into one regular conventional loan.
The terms of a lot loan vary depending on the lending company. Lot loans are most often available with short term adjustable interest rates. Even though the loan is fixed for 3 to 5 years the monthly are amortized over a 30-year loan. This is HUGE! Because it allows you to maintain low monthly payment will you work on building your home. The reality is that you should be able to completely build and move into your home in 3-5 years (possibly even sooner) that the main reason for the short-term ARM options. Lot loans are meant to be temporary, not long term.
Lenders will stipulate the monetary limits of a lot loan, requirements for acreage, and what qualifies as an acceptable lot. Whereas land loans can be used for undeveloped pieces of property, lot loans usually need to be in an area that is considered potentially residential.
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