Borrow on land

Need to borrow on land I own
Posted by: Darcie Dunlop Jul 30 2004, 11:31 AM
I own 3/4 acre in Southern California. Last year it had a house on it, but due to fire, it no longer does. I paid off the property with insurance money and bought another house. Now, I’m hitting on hard times and would like to pay my creditor’s by borrowing money against the land. I’ve been told it’s worth up to $200,000. I’d like to borrow $75,000. What is the best thing to do?
Posted by: loanuniverse Jul 30 2004, 01:53 PM

The problem here is that this loan will be looked at as a consumer loan and as such will be underwritten using your personal income as the source of repayment. If the “hard times” that you mention include events such as loosing your income this might keep you from qualifying.

My experience with land loans is mostly with small and medium sized real estate developers, and the loans are usually for short terms {12 to 24 months}. In those cases, the developer’s cash flow is not the primary source of repayment of the loan as it is expected that a construction loan will replace the financing and that new loan is considered the primary source of repayment.

In your place, I would go talk to a couple of lenders so that they can advise once they know all of the information about your financial situation. Do not go with the first person that offers you financing. You need to shop around.

If financing is not possible, I would consider selling the land. It is true that marketing it might take a while, but it might be something that needs to be taken a look at.

Good luck.
Author: Commercial Loan Underwriter