Question: What are the steps of buying just raw land and with a loan? What kind of questions or information do i need to find out?
Answer: Whenever you are borrowing money with a land loan, it’s important to understand the amortization table so you don’t agree to putting your self in a negative amortization situation. That is, with each payment the borrower is only paying towards interest and the principal amount never changes. Also, most banks won’t loan on land so you will be financed by the seller. Be certain you understand the monthly payment, interest rate if there is a balloon payment, the term of the loan and if there are any fees or penalties for pre-payment. You also want to be certain that if they are using a land contract that they guarantee in writing that the deed will transfer free and clear of any liens or encumbrances.
Also, don’t be afraid to negotiate for a lower interest rate, payment or better terms.
