Most consumers do not realize that these types of loans are readily available. If you wish to purchase a lot to construct a new structure, there are loans available for this exact thing. These specially-designed loans are quite different in structure, the underwriting process, and the accounting side.
What is a Building Site Lot Loan?
If you are ready to purchase a site to build a new home or a new building, a building site lot loan will allow you to do just that. This type of loan allows you to purchase the vacant lot first. Many desire a specific location for future construction and this type of loan allows you to secure that location. These loans are often more difficult to find and many lenders have less favorable terms associated with these types of loans than that of the more conventional loans that are commonly obtained for mortgages; however, we here at Somerville Bank strive to ensure the best rates possible for our clients.
Commonly Affected Terms
There are differences between lot loans and standard loans for structures that are already in existence. One of the main differences are the terms associated with the loan. The terms will be based on the borrower, the conditions of the lending market, as well as the institution. You may see that the following terms are a bit different than conventional loans:
- The availability of funds
- The amount of the down payment involved
- The overall length of the loan
- The collateral required
- The underwriting and overall loan process
- The interest rates associated with the loan
Building site lot loans are short-term loans that are commonly designated for real estate. You may use the money acquired from the loan to purchase land, start construction on property that you currently own, or – in some cases – renovate structures that are already in existence. Unlike similar property loans, these are similar to that of a line of credit. In other words, you borrow what you need when you determine that you need it. Additionally, you will only pay interest on the amount of the money that you actually borrow. During construction, most are only required to pay interest.
If you have a desire to learn more about building site lot loans and want to start the application process, you may visit us at one of our 7 locations.
These include our Ohio Locations: North Eaton, South Eaton, Somerville, Camden, Oxford, Hamilton, and the Mortgage Center in Richmond Indiana.
For more information, simply contact one of our friendly staff and we will be more than happy to assist you.