Land loans are a little bit different from home loans – and they’re not as common as home loans are, so you may have fewer options. Unfortunately, that means that there’s less competition between lenders, so lenders have the “upper hand.” Your Lake City REALTOR® will be able to point you toward a local lender if you’re having a tough time finding one that meets your needs, but in the meantime, here’s what you need to know about getting a fixed-rate mortgage when you buy land in North Florida.
What is a Land Loan, and Can You Get a Fixed-Rate Mortgage When You Buy Land?
A land loan is a type of financing that enables people to buy a tract of land. For lenders, they’re riskier than standard mortgages are – statistically, people who own land are more likely to just walk away when they can’t make payments. As a result, lenders are more careful about making these types of lending decisions.
Applying for a land loan is a lot like applying for a mortgage to buy a home. There are five main types of land loans, though:
- Lender land loans. These more often come from community banks and credit unions – large national banks typically have very few lender land loan products.
- USDA Rural Housing Site loans. These loans – Section 523 and Section 524 – are designed for low- to moderate-income borrowers and must be repaid within two years.
- SBA 504 loans. If you intend to use land for your business, you could qualify for a Small Business Administration 504 loan.
- Home equity loans. Some people take out a home equity loan from their existing mortgage to finance a land purchase.
- Seller financing. When the land’s seller is willing to offer short-term financing, it’s called seller financing. A lot of people use seller financing to buy land in North Florida.
Can You Get a Fixed-Rate Mortgage When You Buy Land?
Generally, the terms of your land loan are between you and your lender. Fixed-rate simply means that your interest rate won’t change over the life of your loan – so it’s entirely possible to get this type of loan.
Are You Buying a Home or Land for Sale in Lake City?
If you’re moving to Lake City, we can help you find the perfect place to live. Call us at 386-243-0124 to tell us what you want from your home and we will begin searching right away.
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