EastTexasLand.com

I thought an update on current land financing options couldn’t be more timely considering our current economic/credit crisis  - or so the all-truthful media tells us. But actually there are no shortage of funds available for land purchases - especially in East Texas - and with the right lender. If you are thinking this is loan shark territory with 50% down and 12% interest rates, don’t. Read on. 

I took a survey of 3 different land lenders in East Texas that I routinely go to for land financing to hear what they had to say. Here’s what I found:

All three banks had not restricted their lending on land purchases in any way. Rates ranged from 6.25% to 8.5% depending on the term of the loan. Loan lengths ranged from one year to 30 year terms. Down payment requirements were 15% across all three banks. Minimum credit scores averaged around 670 - with one bank having no minimum credit score requirement. One bank had better rates available for larger down payments and higher credit scores. All three banks have loan programs available that allow for funding of a land purchase now and future construction funding of a primary or weekend home on the land and 30 year fixed rates to go along with the land and home.

So why is this not common knowledge that these community banks and land lenders have money to loan and are actively funding rural land purchases all day long? Primarily because they are not Wells Fargo, Bank of America or Chase. Those banks are the ones that stay in the headlines, but those banks don’t lend on farms or ranches or rural and recreational land. They lend on homes, cars, boats, apartment buildings, commercial land, etc, and they’re not doing much of that right now. That is their territory and their comfort zone ( banks have comfort zones too). Buying rural property takes a lender that understands land and has a history of those transactions. That is how you can get rates in the 6 and 7 percents that I mentioned above. One further point on comfort levels: one of the banks I spoke with said that in the 121 years of their bank’s history, they had never lost on a land loan.

More on this topic next week.

For farms or ranches available for sale in East Texas, check out EastTexasLand.com, and call us at 903-439-4936. We can get you more information on the current financing options of the lenders we deal with on a regular basis for rural land purchases.

Check back here each week as I will be hitting topics appropriate to land purchasing and financing, wildlife management, ag exemptions, and weekend homes/cabins among other topics; as well as interviews with bankers, wildlife managers and real estate experts regarding land. 

Thanks for reading.

EastTexasLand.com