A little about a lot loan | SummitDaily.com
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A little about a lot loan

BOB KIEBER

Here in the High Country visitors from all over the world decide that they too want to own a piece of paradise. From small residential lots to massive acreage changes hands all the time. Prices range from five figures to figures that have so many zeros I even get overwhelmed at times. So how does one go about buying and financing a piece of paradise?I always suggest to potential buyers that the first step in buying is knowing how much they can afford to buy. In the case where raw land is going to be purchased the cost of the land is only part of the total dollar figure they need to know. What use is the land if they buyer closes the deal and now owns the land but cannot afford to build the home of their dreams. The cost of the land and the cost to build that perfect home needs to be determined and a basic budget set. In that budget is the land, the architect, the surveyor, the cost of government permits and the contractor. Then after all the construction is complete and the Certificate of Occupancy is given by the government then comes the cost of window treatments and furniture.I guess that I am old enough to remember when we bought drapes or blinds but now we have window treatments and those can really get costly.Loans for land, on its own, is a simple process. Mortgage lenders can get a deal complete in very short order. An appraisal, the down payment and we close. But here comes the down side of buying land using a mortgage. Most lot/land lenders require at least twenty percent for a down payment. Plus, the life of the loan may a problem for the buyer, especially if the lender sets a short timeframe on the terms of the loan.As an example, most land/lot lenders want the loan to be converted to a construction loan within two years from the date the land was purchased. So if you are buying the land for speculation that makes the deal ever harder to stomach.If you are buying the land and once the land is purchased your schedule is to get the building plans done and construction started in a year the lenders will be much more agreeable. So here are my recommendations for those of you who are considering the purchase of land. One, meet with your lender early on in the process. Two, check out the building requirements for the area. Three, talk with a local architect to determine the costs of design. Four, interview a couple of builders to feel comfortable with them and to get a rough idea of costs and their work schedule.The work you put into planning ahead will save you time, money, heartaches and headaches when you do decide to go ahead and buy that raw piece of land.For answers to your mortgage related questions call Bob Kieber are (970) 262-1199 or e-mail him at rkieber@comcast.net. Bob is a local mortgage lender and principal of Resort Lending. He has 30-plus years of professional experience in real estate, finance and investments, and is a longtime resident of the High Country.


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