Alta said:
Are the interest rates being quoted in this thread for raw land with no improvements? They seem quite high from what I've been quoted and others I know who recently bought say 40-200 acres. All of those have had some improvements such as roads, etc. on them and in one case a house as well.
House makes a huge difference - improvements like a barn or barndo as well. Just depends on the lenders policy and if they accommodate for recreational land as a consumer purchase. Most banks will put it in one of a few buckets - consumer / recreational purpose, commercial or AG production
Land with a home or plans to build would generally qualify as a consumer purchase loan with terms closer to a primary mortgage on a homestead. If it's a second home the rate might be slightly higher. Max LTV should be around 80%-85% and most banks will go out to 30 years depending on the LTV
Also the land banks are going treat land differently for obvious reasons. Many of those are also coop so you qualify for an annual dividend if he bank declares a dividend. Most are pretty consistent with the dividend but some might miss a year or two based on income
Banks look at it based on the security interest (the collateral) - land with a house has less risk of default and easier for the the bank to unload in the event the borrower defaults.
Also depends on the market. If you buy raw land in Collin County where the valuation is much higher than the AG income can support you'll probably get more questions from the lender. The regulatory requirement for non-state banks is 65% loan to value if it's perceived to be a speculative investment
