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What is the best way to buy a lot?

Contributions: 16

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Is it a good idea to use a home equity loan to purchase land for a future home, or another mortgage?

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February 03 - East Wenatchee

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Pasadenan
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Pasadenan

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The math doesn't seem to work... You will be paying an extra $560 per month, for having an empty piece of land that you will have to maintain (mow, weed, prune trees, water, repair fencing, remove dumped trash...) and pay taxes, insurance & water...

In the meantime, the property value for the lot and the house will probably continue to fall.

So, if you have an additional $560 per month income presently now to spend on mortgage interest, why weren't you putting that money asside into an investment so that you can pay more in a down payment?

And what will you do with the empty land before you build? It will have no income potential if you can't find people that want to rent pieces for their garden, unless you are an excellent farmer and can sell more than $560 of produce from the farm each month.

And if you are going to build and you max out your borrowing potential on your house, where is all the money going to come from for the construction?

Before considering such an idea, make sure you do the math and take into account your time and what you ENJOY spending your time on.

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February 03

vanswey
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vanswey

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thanks for your help

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February 03

Dave Skow, "daveskow"
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Dave Skow, "daveskow"

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you should be very close to beign able to round up the 100K with the 2 new loans outlined

you would need to try to get seller of lot to drop price a little bit or find a source of funds to make up the " shortgage " that the new loans cant get you

here are some ideas on pricing for the 2 loans ( assuming credit scores are>740 and you can qualify fine )

feel free to post a quote request on zillow marketplace for detailed quotes on this idea ( if interested )

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February 03

vanswey
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vanswey

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The lot cost $100,000.

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February 03

Dave Skow, "daveskow"
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Dave Skow, "daveskow"

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thanks

you could do a new 1st mtg up to 80% loan to value ( ltv) ...this would get you to a 240K loan amt ...and approx 80K in cash back

you should be able to tap into another $15K via a home equity line

how much does the lot cost?

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February 03

vanswey
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vanswey

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Our house is estimate at 300,000 and we owe about 160,000.

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Dave Skow, "daveskow"
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Dave Skow, "daveskow"

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good to know that you have lots of equity in home ...what do you figure the house is worth and how much do you presently iowe on any mortgages on it ?

by " leverage" , I mean do either a new " cash out " refinance 1st mortgage on the home and/or a home equity line of credit or both on the present home

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February 03

vanswey
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vanswey

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What do you mean by leverage another property? We have a lot of equity built up in our current home and when the market is better in our area we would like sell and build a bigger home. We have found a lot we really like and would like to purchase it now but we don't have the cash.

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February 03

Dave Skow, "daveskow"
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Dave Skow, "daveskow"

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1) use cash
2) leverage another property ( ideally your home , if you own one ) to get the cash needed to buy it
3) offer the seller some cash and ask them to " carrry" a note for the balance
4) get a lot loan ( not many lenders left doing this ...large down payments needed and costly )

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February 03

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When I look to purchase a home,

I try to find one real estate agent and stick with him/her.

I only call upon the agents who personally list those particular houses that interest me.

I do it on my own & look for FSBOs. I'd rather not have fees tacked on for the use of a middleman.

It's a mixture of going to FSBOs, using listing agents, & sometimes calling on my favorite agent.

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What is the best way to buy a lot?

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Question What is the best way to buy a lot?

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