How to Compare Lot Loans
Gather the details of your proposed loans, including the amount to be loaned, the loan's percentage of the purchase price, interest rates, loan fees and types., List or highlight the important details from each loan proposal., Eliminate any loans...
Step-by-Step Guide
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Step 1: Gather the details of your proposed loans
You can make your list on paper, with columns for each lender and the loan terms listed in order.
You can also create your list in a spreadsheet, which may help you compare terms easier by using the sort and filter features. , You should seek other lenders if the loan amount plus your savings for a down payment is not equal to--or less than--the listed price of your land.
It is rarely advisable to borrow any portion of your down payment.
Many lenders will not allow it. , Some loans may require a substantial balloon payment at the end of the loan's term.
Balloon payments can be difficult to plan and save for.
Other lenders may ask for exorbitant fees that are not fully explained. , While it is possible to spend far more on a higher interest rate than by going with the lender with lower interest, but higher fees, it is still a good idea to have the details concerning upfront costs in front of you. , Variable rates can turn out to be a good deal, but they are always a gamble.
Many consumers prefer to take a fixed interest rate, knowing that they may be able to refinance their investment should the federal prime interest rate fall far below what they are currently paying. , Some lenders will allow you to do this when you are ready to begin building.
This allows you to make a single monthly mortgage payment and may reduce the overall interest paid over the life of the loan. -
Step 2: including the amount to be loaned
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Step 3: the loan's percentage of the purchase price
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Step 4: interest rates
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Step 5: loan fees and types.
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Step 6: List or highlight the important details from each loan proposal.
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Step 7: Eliminate any loans that will not provide enough upfront capital for your proposed purchase.
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Step 8: Decide if any of the proposals include loan terms you are unwilling to accept.
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Step 9: Total the fees required by each lender.
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Step 10: Choose between fixed or variable rates.
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Step 11: Ask your potential lenders about rolling your lot loan over into a construction loan.
Detailed Guide
You can make your list on paper, with columns for each lender and the loan terms listed in order.
You can also create your list in a spreadsheet, which may help you compare terms easier by using the sort and filter features. , You should seek other lenders if the loan amount plus your savings for a down payment is not equal to--or less than--the listed price of your land.
It is rarely advisable to borrow any portion of your down payment.
Many lenders will not allow it. , Some loans may require a substantial balloon payment at the end of the loan's term.
Balloon payments can be difficult to plan and save for.
Other lenders may ask for exorbitant fees that are not fully explained. , While it is possible to spend far more on a higher interest rate than by going with the lender with lower interest, but higher fees, it is still a good idea to have the details concerning upfront costs in front of you. , Variable rates can turn out to be a good deal, but they are always a gamble.
Many consumers prefer to take a fixed interest rate, knowing that they may be able to refinance their investment should the federal prime interest rate fall far below what they are currently paying. , Some lenders will allow you to do this when you are ready to begin building.
This allows you to make a single monthly mortgage payment and may reduce the overall interest paid over the life of the loan.
About the Author
Kathryn Peterson
A passionate writer with expertise in home improvement topics. Loves sharing practical knowledge.
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