Buying Land

Financing Rural Real Estate

Listen as Pat Porter, land broker at RecLand Realty, addresses a question that land agents are asked quite often, especially from first time land buyers. That is, “How can I get this land financed?”.

Obtaining financing on unimproved, or raw land with no plans for improvement is typically more difficult than securing a home mortgage. A good land agent will direct potential buyers to seek advice from several lending institutions who are familiar with financing rural land.

Lenders consider land loans to be much riskier than home loans, especially if there are no immediate plans to develop the land being purchased. Would-be buyers can prepare to plunk down a hefty down payment of anywhere from 20-50% and expect to be charged a much higher interest rate than traditional home loans.

Lenders have much stricter requirements in place for those seeking approval for a land loan. As a general rule, applicants would need to show that they have legal, deeded access to the land before a lender will fund the loan. However, as Pat points out, there are exceptions to the rule, such as financing a timberland tract. If wood product is being grown on the property, whether or not the property has legal, deeded access is generally of little concern to the lender.

If you’re dealing with a property without deeded legal access, be upfront with your lender. Pat recommends being direct with lenders; ask them if not having legal access will present a problem.

Buyers should not be surprised if lenders and title companies require a new boundary survey. Whether or not it is required, varies from state to state.

Those looking to purchase land for sale should not be discouraged from attempting to obtain a land loan. Lenders and land agents will work closely with buyers and do the best they can to help buyers obtain financing for land.

This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of LANDTHINK. Use of this content without permission is a violation of federal copyright law. The articles, posts, comments, opinions and information provided by LANDTHINK are for informational and research purposes only and DOES NOT substitute or coincide with the advice of an attorney, accountant, real estate broker or any other licensed real estate professional. LANDTHINK strongly advises visitors and readers to seek their own professional guidance and advice related to buying, investing in or selling real estate.

About the author

Pat Porter

Pat is the broker for RecLand Realty. We specialize in selling hunting land, timberland & farms in LA, AR, MS & TX. RecLand Talks is the video blog for RecLand Realty, the Duck Commander & Buck Commander Endorsed Land Broker. See their company website at RecLand.net or our video blog at RecLandTalks.com.

My wife, three boys and I are land owners and enjoy hunting, shooting and an outdoor lifestyle. We live in northeast Louisiana and are in the woods somewhere several times a week.

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