Everything You Need to Know About Land Loans!
Florida Commercial Land Loans
Looking to invest in a parcel of land for a new business venture, or to build your dream home? Shop Commercial Mortgage has Everything You Need to Know About Florida Land Loans!
Unless you are ready to hand over cash up front, this process is not as simple as you may be thinking. A parcel of land is an investment, usually requiring financing, and though a wee bit more difficult, is not impossible to obtain financing for!
Land loans are handled differently than your typical mortgages and other secured types of loans. Land loans are more of a risk because the vacant land will not deliver the same kind of investment security for the creditor that a home will. The Investor’s theory is that you typically aren’t going to walk away from your home, BUT an undeveloped piece of land just sitting… well, you are more apt to walk away. This leaves your Florida Hard Money Investor with land to try and sell in attempts to regain any losses. Another factor in obtaining the finances is your plan for the land. What will you be doing to improve and increase the value of this parcel. Investors want to know and some may even increase their interest rate to account for the risk.
Financial considerations such as what your plans are for the parcel will be considered. How will this purchase bring a return? Also, if the land is considered raw land, (without man-made improvements such as roadways, sewer, water) this is a higher risk. However, this type of land may qualify for a Commercial loan or, depending on your plans, may fall into a construction-to-permanent loan. Traditional financing options which, may pose a few bumps in the road, can still be utilized. Local Investors (bank or credit union) will cap the amount of money you can borrow despite credit history, require a larger down payment, have an increased interest rate, and offer shorter loan terms but they will know the variables pertaining to the profit of your land. In addition, expect other fees for title search and insurance, land appraisal and survey, attorney fees etc. Owner financing may be easier to obtain but prepare your negotiation skills. A Contract for deed, allows you to pay the owner installments over time receiving the deed upon fulfillment of balance owed. A Mortgage/Trust deed is another option where you receive the deed in return for a promissory note and mortgage contract guaranteeing payment agreed upon. If you have enough equity built up in your home you can always take out a home equity loan which is easier to obtain, offers simple repayment terms and tend to have lower interest rates. Or borrow from your 401(k), if a valid option through your employer.
Let us help you acquire the Land Loan you need! We offer a variety of term options, lower rates, and fast closing matched with years upon years of experience. Contact us today to get started. We are now serving Jacksonville, Pensacola, and the surrounding Tallahassee areas!