Financing for lot purchase?

Question

I am looking at a half acre lot for sale at $30,000

I have heard that getting financing for a lot is more involved than with a home mortage. I currently have a mortgage on a home. It is appraised at $56000 and I owe $39000 on the mortgage. My credit is around 630

Granted there are alot of variables and such, but in general, is it likely that I can get an opportunity to finance the property with minimal down, or is it a general principal that lots require a large down payment regardless of anything to secure the loan?

Answer 1

Sorry for this reality check, it is not the answer you want, but let's look at the real issue here.

Yes, buying land can be a good idea, but perhaps not for you at this time. You indicate your credit score is 630. That score is just above the 620 minimum that is considered passable. It is not a score that is considered "good," rather it is a score that is termed "fair" at best. Not only will your present score penalize you in terms of interest rates paid, but purchasing this land with a mortgage will be enough to tank your score below 620 and make you a sub-prime risk. While you might qualify for this loan at a high interest rate, you might find your credit card and insurance rates go up, and if you need any other type of loan in the next year or so, it would carry a high interest rate.

Your score indicates either you have had credit issues in the past which you have recently corrected or you're in shaky condition right now. It evidences you've had late payments in the past year or presently have high balances. Either way, if you think that you have enough extra money to put towards land right now, you should probably put it towards correcting the credit issue.

Paying your bills on time for three months and/or paying down the balances will increase your score considerably. Another three months will do that some more. One year will have even more impact, and another year should bring you up to the 700s. At that point, purchasing the land will be much less expensive in terms of interest paid on the loan each month.

Good luck!

Answer 2

please read "things to do before buying land" posted by soulblaze. i address financing in my answer.

it is a great idea to buy land. as will rogers said: buy land. they don't make too much of that anymore.

good luck!