For those looking to buy undeveloped land, the going can be rough. If you’ve got the cash just burning a hole in your pocket, you can always just make a direct purchase – but most of us live in the real world, where that kind of money comes over long periods of time, usually in the form of mortgages and loans. Taking out a land loan, however, can be harder than getting a mortgage for a home.
The trouble is that banks know land loans are more risky than mortgages. If a bank is going to loan out some money for a home, they know it’s top priority on the borrower’s list of bills; after all, nobody’s going to brush off a payment if it might land them on the street. If losing the land is all you have to fear, you might not be quite as panicked at the thought of it, and that means the bank doesn’t get its money back.
Taking out loans for land may be easier if you have a good idea of what to do with that land. If a bank knows you’re going to be establishing a profitable business, they’ll be much more likely to finance you. They know that you’re going to be less likely to default on your loan if you’re making money on that land. This is one of the reasons businesses like Finance Express make their living as a go-between with businesses and banks. They know that there’s going to be better negotiation if the land is being converted into a new business.
Another thing to watch is your credit score. If you’ve been eyeing a piece of land for a while, you may be tempted to go out and get a loan for it immediately – and if your credit rating is high, you should probably go for it. But if you’ve got a bad credit score, you might want to hold off until you can improve it. For one thing, good credit will help you to get the loan in the first place – but even if the bank is willing to give you a loan with bad credit, they’ll charge you an arm and a leg in interest, because they know they’re taking a risk with you. If you don’t want to end up with a load of bank debt, you might just want to focus on the bills you’re paying now and work to improve your credit. You can buy the land later, when you can afford the loan rates.
