Is a mortgage on undeveloped land possible?
I live in Texas, but have learned of some property in Kansas City that was some of the first land purchased by my great, great grandfather from when he settled there in the 1860's. It is property my mother is familiar with and we would really like to get the property back in the family someday. I believe it's a twenty-acre plot that is still undeveloped.Would a mortgage company do a mortgage on undeveloped property?And, if by chance the current owner isn't ready to sell, but would (hypothetically) accept an offer as much as doubled of what they paid for it, would a mortgage company shy away from the selling price because it looks inflated?If so, what are my options short of offering the property owner a cash buyout?Thank you for your time,Karl SweetSpring, Tx by karlsweet9989 from Spring, Texas. Mar 9th 2011
Corey Seitz (Corey_Seitz)
#35 ranked lender in Colorado - 24 contributions
Hi, The best bet would be to check with a local bank that you have a deposit relationship with. Many banks will lend on land to a strong borrower with a 20% to 25% down payment. The banking world is pretty small, if your local bank can not help you out they will likely know what banks in town are currently lending on land. A conventional mortgage will not be available as Fannie Mae and Freddie Mac will not purchase a loan secured only by land. Have a great day and good luck with your purchase, Corey corey_seitz@excelfg.comwww.bestcoloradomortgage.com
Dan Paladin (dpaladin)
#356 ranked lender in California - 792 contributions
Lot or land loans are available though harder to secure...LTV's are very conservative....could be less than 50%.....have not had a land loan scenario in a long time....best to search for hard money or local bank in that area for specific guidelines....though be prepared to have a large down payment...hope this helps a little....
Jim Costello (jimc@homemortgagelender.com)
#82 ranked lender in Florida - 22 contributions
If the owner is willing to sell, many times they will know the difficulty in selling undeveloped land and would consider holding a note for the balance of the purchase price. If the seller only wants to sell it for double the value, then you should expect that he hold a note for the balance. A lender will only lend on the appraised value so if you can get the seller to hold a note now then you can refinance it later on, and the seller can subordinate a note to the banks first mortgage. A locally owned bank (not a national bank) near the property is the best bet for getting a mortgage.
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