Land Loans Experts In Denver, Colorado

Interesting Facts About Land Loans

• Land loans are a type of credit used to finance the purchase of a plot of land. You can take out a land loan if you're interested in buying a piece of land to build a home or for business purposes. How easy it is to qualify for a land loan depends on where you buy the land and what you intend to use it for [1 ].
• Most often, the best places to get land loans are local or regional banks and credit unions. These institutions usually have the local knowledge necessary to assess whether a loan for a particular piece of property is a risky proposition [2 ].
• Lenders consider land loans riskier than regular mortgages. If a lender has to foreclose on a land loan, there’s no guarantee of recovering the money. Vacant land is much harder to sell than a lot with a house on it because there is less demand for land than there is for already-constructed homes [3 ].
• The construction loan process generally follows a series of steps. The borrower applies for a construction loan, submits financials, plans, and project timelines. If approved, the borrower starts drawing funds in conjunction with each phase of the project, typically only repaying interest. Once construction finishes, the borrower repays the loan, or more commonly, converts the loan to a permanent mortgage and begins repaying both principal and interest [2 ].

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