Compare Mortgage Quotes

Refinance Rates for Today

Please enable JavaScript for the best experience.

In the mean time, check out our refinance rates!

Company Loan Type APR Est. Pmt.

Using land as collateral to buy a house

Hi,

I have been given a peice of land valued at $110,000.00 but do not want to build in the area where the land is located. It has been in the family for many years and I do not want to sell it either. Can I use this land as collateral to buy a home somewhere else? I have been told by one person that I can not unless I put a small cottage or home on this property??? If this is the case what are the requirements of this cottage for it to qualify so I can use it????

Thanks
Julie

howard.nugent's picture
howard.nugent | Joined: November 17, 2009 12:42 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

In today's lending environment, you'll find it difficult to do anything with the raw land.

For example, with my previous employer, the maximum cash-out on raw land was $25,000. This would be using a lot loan which typically carried a balloon payment in 5 years.

In the mortgage world, you're best considering this land as a liability instead of an asset. We count the property taxes in your debt to income ratio, which lowers your purchasing power.

You can't cross collateralize a mortgage (one mortgage against multiple legal land units.) So you're basically going to just have to take out a loan on the new home you want.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:51 | Post subject:

jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

I agree with Howard. In these tough economic times, no lender would want to offer you a loan against raw land. There has to be a house on it for you to get a loan against it. Moreover, you cannot take out a loan against the land and build a home somewhere else. If you are going to build a home somewhere, you need to use it as collateral for the home loan. You cannot build a home using some other property as collateral for the loan.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:51 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I would like to know how do I go about using land fo collateral to purchase a houise. Please call Charlena Singleton at 843 952 8786 as soon as possible.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:51 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Charlena,

You will have to contact a lender who can offer a land loan. Once you receive the money, you will be able to use it to buy your home.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:51 | Post subject:

Page loaded in 0.137 seconds.