Lot Loans & Rates

Lot Loans & Rates Posted by: Jay J Apr 16 2004, 01:49 AM


My wife and I have found a lot that we like and are looking for a lot loan but were not sure of the type of terms to look for, some say that we have to have any where from 20-25% down of the full price of the lot. I’ve even heard that some lenders have some for 5%.

The other thing that we would like to know is about the interest rate of the lot loans, one bank that we looked at says the rate would be for a 20-year ARM 8% and a 1% Origination Fee or a 20-year Fixed 8.5% 1% Origination Fee.

But from what we understand this does not roll over into a Construction loan or mortgage which we are ok with as we thing that we should be able to pay it off in 2-3 Years if all goes well. To add to this our Beacon Score is 760 for my self and my wife is some where around 767 so it’s not like we have bad credit, I would think that we should be able to get a better rate.
Please if anyone could educate us on this.

Jay J

Posted by: Jay J Apr 16 2004, 02:00 AM

I hope this made sense what I’m asking

Posted by: Jay J Apr 16 2004, 02:13 AM

Sorry After I posted this I read it.
It didn’t really make much sense to me, so I’m sure it didn’t to you
I guess what we want to know is how the lot loan process works
what to look out for, what might work better for us as stated we should be able to pay off the 90,000
loan in 2 years if all goes well and we don’t plan on building on it for 2-5 years
any help please

Jay J

Posted by: loanuniverse Apr 16 2004, 09:35 AM


Loans for lots of land that is going to be used for a commercial project are usually considered speculative unless there is a definitive plan to develop the land in place, and the principals are professionals that do this for a living with a proven track record. This site is geared towards commercial lending. However, the tone of your post and the amounts that seem to involved lead me to believe that the lot that you are looking to buy is a residential one.

I am not all that familiar with this type of lending. While in commercial lending, we would require at least a 25% down payment and probably an even higher number, I am sure that there are programs out there to help people buy residential lots. I also think that your credit scores are very good and should go a long way to help you get the loans once they are scored the way those types of loans usually are.

My only feedback would be: “Do not limit yourself to one lender. Contact at least one more in person and maybe even three more by phone to see if they can give you better terms”

Good luck

Posted by: Jay J Apr 16 2004, 01:25 PM

Thank you for the reply

Note from the site owner: Looking back on this as I am transferring these old posts to the new site almost twenty years later, this lot loan question was easily answered by referring them to a residential lender as they do lot loans followed by construction loans all the time.
Author: Commercial Loan Underwriter