Financing in 04401>Question Details

Tory Dearborn, Other/Just Looking in Bangor, ME

What kind of loans are available to purchase bare land and then build a home on it?

Asked by Tory Dearborn, Bangor, ME Mon Feb 22, 2010

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The other agents have some god ideas. Depending on where the land is you maybe able to also get a USDA loan.
0 votes Thank Flag Link Wed Feb 24, 2010
Thank you, Tory, for your question about purchasing unimproved land, and buidling a new home.
In Bangor, we have a number of excellent lenders that offer land loans, or a one close loan. Depending on what want type of building you want to place on the land, and what your income,cash,& collateral available, and current credit score qualify you for, there may be some lower downpayment government loan options as well. If you're buying in the short term, the ideal loan package is basically a single close loan to reduce the expenses for the process. There are a number of different ways that an experienced lender can match up the loan package that works the best for you.
0 votes Thank Flag Link Wed Feb 24, 2010
Most of them would be construction loans. A lot depends on how soon you plan to build as to what type of loan to get. Many local banks & credit unions offer straight land loans and construction loans. Start with the lending institution you have accounts with now- ask what they have to offer......then do a little scouting around for comparison shopping. Most of the lenders will be pretty close .
0 votes Thank Flag Link Mon Feb 22, 2010
Generally these are called Construction to Permanent loans.

Your loan is actually broken down into 2 parts. A percentage of the loan is disbursed at settlement to purchase the land - then funds are released in smaller increments to enable a home to be built to your specification. These installments are generally called "Draws".

These loans are more difficult to find these days - and the guidelines to qualify have become more stringent.

Check with your local Realtor for some bank referrals where you can inquire about the availability of these loans in your area.

Good Luck!

Gerry Dunn
0 votes Thank Flag Link Mon Feb 22, 2010
Hi Tory, These are called construction loans. These loans are short-term and paid off once the home is built. The lender holds the cash and pays the builder as work is completed. Once the home is built a traditional mortgage is taken out to pay-off the contstruction loan and you are all set to move in. We have several lenders that offer these types of loans in Maine and would be happy to help. Good Luck!!
0 votes Thank Flag Link Mon Feb 22, 2010
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