How To Use a Land Loan to Finance a Home Purchase | Personal finance
Next come undeveloped land, somewhat subject to interpretation and sometimes synonymous with raw land. Typically, however, undeveloped land refers to land that has access to some basic utilities, but still lacks major features such as an electric meter, phone booth, or natural gas meter. In other words, there are few improvements added to the plot.
It may be a little easier to qualify for an unimproved land loan than a gross land loan, but it is still considered risky. Again, you should have a solid credit score, a down payment, and a plan for the land.
Improved earth is the more expensive option since it is fully developed and ready to be built. It is also often easier to qualify for this type of mortgage loan, and lenders offer lower interest rates and down payment requirements.
Types of land loans and how to get one
Once you’ve saved up a down payment, made plans for your land, and achieved a solid credit rating, it’s time to look for lenders. Home loans are not as easy to obtain as mortgages, but you have several options.
Local banks and credit unions
One of the best places to look for a home loan is your community bank or credit union. Local financial institutions will have a good idea of how the surrounding land can be used and will have more flexibility when it comes to working with clients.