Best way to finance?

[Chris(Guest)]

Greetings,

I'm seeking to finance a property, asking price $15K.  I would have $3K to put down, and would be able to make about $3K in payments each year, until I am ready to sell my house here in the city (about 1-2 years from now), in which case I would be able to pay the remainder of the loan completely off.

I haven't looked into getting a loan for land before, so I don't really know the best way to go about it, or a good lender who isn't going to charge me an arm and a leg for closing costs.  Furthermore, I don't know if I would need to carry insurance on land if it is undeveloped but mortgaged.

I have also been told that a good way to do this would be to simply get a Home Equity Line of Credit, and use the Home Equity Line of Credit as my mortgage.  If the HELOC was linked to my bank account, I could offset some of the interest payments because I would still have about 10K reserve in the bank.

I would like to hear your thoughts, comments, and suggestions.  I'm getting cabin building fever :-).  There's no time like NOW.

Thanks,
Chris

[PEG688]

[size=16]  Pay Cash  [/size]

[Chris(Guest)]

Now that's an answer I won't argue with, except most of my cash is tied up in this home that I presently live in  

So that's why I'm moving forward with "plan b".

Chris

[PEG688]

 Sorry Chris,  slow day and I'm no banker just a builder  
 
Some one with a real answer should come along to give you advice

 Welcome aboard  
 
 Good luck , PEG

 

[bartholomew]

Borrowing against your house would be the best bet. Lenders prefer houses to bare land. They generally want a larger downpayment, sometimes 50% down, and will charge a higher interest rate for bare land. You would also likely have to pay for a survey and an appraisal.

Another option might be to get the seller to finance it. Since they know the property and it's market value, they might be comfortable financing it for a couple of years.

For insurance, talk to your home insurance agent. Your home insurance might already provide liability coverage for a second property or it can be added for very little extra cost.

[james(Guest)]

here some cheap land and its beautiful. www.hawaiiinformationservice.com

[Amanda_931]

Company seems to be Hawaii Information Service, but unless I got hijacked on my way there--and that has happened--the web site is more likely this one

http://www.hawaiiinformation.com/REsearch/

With or without the REsearch--may not make any difference.

http://www.hawaiiinformation.com

[keyholefarmhouse]

Avoiding too many fee collectors will net you the cheapest $$$.  The most direct source is as Bart. suggested, the seller.

Try to avoid appraisal fees if the value is obvious.
Try to avoid additonal surveying (if some one has already done this once)
Liability insurance on barron land should be cheap.  You can get this quote before buying.  Trailors and the like are a differant story.

If you talk to a banker simply tell him you'd like to avoid all extra costs.  He will probably suggest pulling equity out of your existing home, if there is any.  Then, try to avoid an appraisal on it if it isn't really neccesary.

[JRR]

Don't overlook Big Brother!  He may lend you money directly for the land purchase...

http://www.usda.gov/wps/portal/usdahome

http://www.rurdev.usda.gov/

http://www.hud.gov/

Look for key words like "community" and "rural" development, "landowners", etc ... they each may be worth a phone call to see if there is a finance program for your situation.

[Chris(Guest)]

Thanks for all the responses.  From researching your replies, it looks like my best option will be to do a HELOC.  If I'm really careful with my cash flow each month, there is a possibility I will be able to "finance" the land interest free using the HELOC, by linking it with the cash I already have in the bank.  While I could technically pay for the project entirely with cash, I would then have very little left in savings for a rainy day.

The only issue I am sure to come up against is that I am self employed - which for any loan is going to be billed as a negative.  

Thanks again for all of your responses.  And, call me odd, but I happen to prefer the midwest to the islands in the Pacific :-).

Chris

[Amanda_931]

We're not all from the Western U.S., although I lived in Honolulu for years.

Plenty of us from Tennessee--at least two more not far away from me at all, although we haven't heard from them for a while.

Land is still fairly inexpensive in the rural South., you're not competing with giant corporations for farmland.  You may be competing with retirees wanting a home in the country--like me.

But we can get a weird combination of drought + humidity as well as heat in the summer.

[Jimmy_Cason]

Land is still fairly inexpensive in the rural South

Me and my brother Cleatus will sell you some land down by the swamp for a couple dollars and a ride into town!

[glenn-k]

Jimmy, I have friends like that, but there are 3 brothers and a dad too. :-/

[Chris(Guest)]

We're not all from the Western U.S., although I lived in Honolulu for years.

Plenty of us from Tennessee--at least two more not far away from me at all, although we haven't heard from them for a while.

Land is still fairly inexpensive in the rural South., you're not competing with giant corporations for farmland.  You may be competing with retirees wanting a home in the country--like me.

But we can get a weird combination of drought + humidity as well as heat in the summer.

I'm actually in the midwest myself, in Indiana.  I guess that makes me a Hoosier  

Chris