AboutJT Holt Expertise Questions regarding the financing or land values of farm, ranch, and recreational properties. Large working ranches to the small hunting property.
Experience Currently CEO of LandLoanSpecialists.com with 10 years of previous experience in the Farm Credit System as a VP of Credit. Experience as an appraiser of farm, ranch, and recreational properties.
Education/Credentials Bachelors of Agricultural Economics from Oklahoma State University. Continuing education courses in ag finance and appraisals.
Awards and Honors Top volume lender for the last 5 years in previous position.
Question we are looking at buying an acre lot, with 350 ft water frontage. there is not a structure on the property. We are wondering about our options. We have found that we can get a 30 yr loan if we do a land/trailer package. although, we would rather build a small cabin. Can u tell us the details of balloon payments and construction loans.
Answer Jennifer, Most construction loans are set up on some type of variable or adjustable rate with a short term to allow for the construction of the improvements. They establish based on your request a limit that can be utilized for this construction and then once the construction is complete you refinance this loan into permanent financing. This allows you to complete the construction typically making interest only payments during this time frame and then roll the loan into more conventional financing once it is complete. Your best option most of the time for this type of financing is your local bank.
In regard to balloon payments your construction loan may have a balloon to set a maturity date for this portion of the financing. Basically the lender is stating that the construction has to be complete by this date and you need to have permanent financing in place. A couple of things that I would suggest to you before starting construction:
1) See if you can obtain a loan commitment for permanent financing before the improvements are constructed. This will allow you the comfort of know the permanent financing is in place before beginning construction.
2) Not sure in your area but in most when building a permanent structure on a water front lot you have to obtain approval from the Corps of Engineers. Be sure and look into this before building. I've seen people who have had to move improvements because of this.
Best of luck to you. Here at Land Loan Specialists.com we specialize in properties greater than 30 acres and focus on farm, ranch, and recreational real estate. Should we be of any assistance to you in this type of financing feel free to visit our site at: http://www.landloanspecialists.com
