Land Loan California

F

inancing Land in                Appraised Value $800,000
California                      Estimated Value of Land with
                               Building Completed
California Land Loan Overview:        Down Payment $191,125 25% of
                                      $764,500
The intent of this article is to
get you thinking in the right         Benefits of California Land
direction so you know what kind       Lenders
of California land to buy and
what you can reasonably expect as     Loan officers dealing with
you get started in the process of     California land should be able to
dealing with a land lender in         assist you with the following
California.                           information:

California Land Financing Budget      1. Assessment of the estimated
(Example):                            yearly taxes, insurances, and HOA
                                      fees.
Land Purchase Price $300,000 Land     2. Approximate interest rate for
Purchase Price                        the loan.
Soft Cost of Construction $           3. Down payment required.
40,000 Plans and Permits              4. Interpretation of your
Hard Cost of Construction             personal financial statements,
$350,000 Construction Costs           credit scores, and income-to-debt
Closing Costs $ 22,000 Fees,          ratios to conclude your
Title, and Escrow.                    eligibility.
5% Misc. Reserve $ 17,500 5% of
Construction Costs                    Utilities Lead to the Path of
Loan Interest Reserve $ 35,000        Finance
Interest On Amount Drawn
Total Building Cost $764,500          One important thing to consider

as you look to buy California         land a primary residence until
land is utilities. When               something is built, and so it
construction developers go into       follows that vacant land is
the construction stage to build       called investment property even
new homes in Southern California      if a person intends to build on
then roads and utilities are          it in the near future. Also,
built for a large number of           vacant land is called commercial
homes. When the lender knows that     property in California, that is
a lot has public road access and      property used for an investment
utilities nearby they are often       purpose, even if the land is
more willing to supply financing      zoned residential and there are
for the land because there is a       plans in place to build a primary
foreseeable capacity to build on      residence. The importance of this
it which increase the California      categorization for lenders is
real estate worth and lowers the      that their risk increases on
risk to the lender. The cost of       lending for land because a person
installing utilities on a lot is      can walk away from a land loan
not considered part of the hard       easier than a loan on a primary
construction costs for building.      residence since the borrower has
                                      another place to live
Land Loans from a California          hypothetically.
Lender's POV
                                      Lenders for land will expect more
California land loans are more        from a borrow than on a
risky to lenders than residential     residential home loan. There is a
loans. The reason for this is         larger down payment expected
that normally most people do not      typically than a California
live on the land they buy since       residential house or condo. There
it's vacant. As a result it is        is more preparatory work expected
industry practice to not consider     also. Lenders may expect the

borrower or buyer to bring a          both you and your spouse with
variety of items to the lender's      contact information.
table for a construction loan.        • Your property information if
Here is a partial list of             you currently own including tax
potential requirements some           statements, HOA statements, any
lender's stipulate in order to        current mortgage statements, and
obtain a land loan:                   any other debt statements you
                                      currently have.
1. Complete and permissible           • Any additional proof of income
architectural drawings for what       streams, including child support,
will be built on the land.            trust fund, investment income,
2. Detailed time tables for all       dividends, interest, rental
aspects of construction.              income, social security or
3. Finalized realistic budget for     government monies.
the building.                         • A complete list of your bank
4. Supervisory chart, including a     accounts and documentation,
list of builder contact               including all your checking,
information for contractors and       savings, money markets, and
the architect assigned.               banking information.
5. Proof of bonded and insured
builders and contractors.             Conclusion: Some Negatives and
                                      Positives
Here is a list of the paperwork
required from a borrower to get       One draw back is that the courts
started on a land loan in             of law in California have less
California:                           regulations to protect the
                                      interests of land buyers than
• Last 2 years of your federal        they provide to California
income tax statements.                residential home buyers since a
• Last 2 months of pay stubs for      land purchase is considered an

investment. On the positive side,     is that it forces you to think
land is like having a clean slate     through the land buying process
of property.                          ahead of time, talk to the right
                                      people which you will need to
California land buyers have a         help you build a new home in
much easier time when it comes to     Southern California and make a
planning what they want to build,     financial budget with sensible
as long as the building plans         deadlines so that ultimately you
live up to the regulations and        can become a true player in the
zoning requirements of the city       future development of a community
for the land's location. As a         for all to see. Plus you will
land buyer CA you also have much      have a really cool story about
more flexibility on getting what      your personal experience in the
you want than doing a residential     timeless process of building on
home remodel for example. The         California land.
best part of all about obtaining

a loan to buy land in California

About the Author:

California Real Estate information from Christian Keller Williams Realtor John-Robin Middlebrook, homes, commercial property, land, mobile homes, Los Angeles, Orange County, San Bernardino, San Diego, Kern, Ventura, San Bernardino, Kern real estate CA. http://www.southerncaliforniarealestateagent.com