Found the perfect homestead but...

Discussion in 'Homesteading Questions' started by chris774, Dec 1, 2004.

  1. chris774

    chris774 Member

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    ar
    we found the perfect place... 20 acres all pasture with few trees mainly along fences and creek 3bd/2 bath mobile home decent fences
    several out buildings small creek runs down back side and small pond
    deep well with new tank and pump septic rebuilt 2yrs ago close to town but not too close and the price is very reasonable at $55,000 but.....
    cant get a bank to even talk about financing because its a mobile home does anybody have any suggestions???
     
  2. electronrider

    electronrider Well-Known Member

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    Try to find out if you can get a loan on just the land?
     

  3. RMShepp

    RMShepp Active Member

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    How about owner financing, or owner financing of a portion of the loan? Do you have to borrow the full amount?
     
  4. chris774

    chris774 Member

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    tried to get money for just land but all the banks said they couldnt do that.
     
  5. AnnaS

    AnnaS Well-Known Member

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    Sounds like my place- 20 acres with a mobile home. Wells Fargo did it with 15% cash down, which covered the value of the 12 year old 2bed/1 bath MH. They did require that it be anchored or on a foundation, and sent out a guy to photograph the anchor chains.
    Another place to try is the local credit unions, or if you have an employment related CU? Credit Unions tend to be more sensible about rural mobile homes than big banks in bigger cities.
    Good luck & I hope this works out for you!
     
  6. Jo

    Jo Well-Known Member

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    Washington Mutual Bank does Mobile loans.
     
  7. 3girls

    3girls Well-Known Member

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    Washington Mutual did my mobile home on 5 acres in WA state. There were no problems and they like to quickly put their loans in place.
     
  8. mikell

    mikell Well-Known Member

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    Keep looking for a bank many still do them.


    mikell
     
  9. Freeholder

    Freeholder Well-Known Member

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    Just an suggestion (but an urgent one). IMO, you would be better off to take your down payment and buy some land paid for, even if you can only get an acre or two, and then live in a tent, if you have to, until you can build a house *cash*, a little bit at a time. The economy is a house of cards waiting for a puff of wind -- and the puff is starting to blow. I wouldn't have a mortgage right now for anything, it's a good way to end up homeless in the next few years, I think.

    Kathleen
     
  10. Terri

    Terri Singletree & Weight Loss & Permaculture Moderator Staff Member Supporter

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    Are you going through a realtor? The realtor might know.

    Or, perhaps you could go to a place that sells mobile homes, not make any commitments, and ask them about who finances?
     
  11. jack_c-ville

    jack_c-ville Well-Known Member

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    I'll have to be a bit long-winded, but I think that I can at least explain to you why this works the way that it does.

    Land loans are not designed to be long-term mortgages. Usually they have a 1-3 year term, occasionally as long as 5 years but that is less common. Banks offer them with the intention of supporting a new home construction. The idea is that you get your land first and then build the house (usually with a seperate construction loan) and when the house is completed you get a regular mortgage and pay off the land loan with that mortgage, rolling it all into one long term loan.

    The land loan is frequently a 'balloon loan' meaning that you only make interest payment during the term of the loan and at the end of the term the principal comes due in one lump sum.

    In any type of loan, banks determine the rates and rules that they use based on experience with similar types of risks. The people who invest in banks insist that loans be made systematically on the basis of past experience for which there is a lot of data that allows accurate predictions to be made about repayment.

    Home mortgages are pretty good risks for the bank to take because people make their homes a top priority. If money is tight, a person is more likely to let payments on their car or boat (or vacation house) lapse rather than risk losing their primary home.

    That is where land loans differ from home loans. Loans on land without a permanant house built on it essentially become loans on speculative investment. Overall, you're going to have a rate of default that is even worse than for car loans. And while cars generally depreciate quickly while land does not, it is generally much easier for a bank to liquidate a car for a predictable price than it is to liquidate land.

    I don't know how much cash you are working with, what your credit is like, how much construction costs are in your area, etc. But if I were in your position I would look into the cost of building a cottage on the land for as little as possible. The idea being that you can then get conventional loans with a 15, 20 or 30 year term.

    You would probably have to spend at least $45k to build the cottage. But think of it this way: you'll probably have to put a lot more money down if you can even find a long term land loan. Minimum down payments for vacation homes is 40%, which I suspect is the same amount a banker would require for a theoretical long term land loan (the risks of default being similar). So you're coming up with $22k cash to do it that way. But with a regular home loan on a newly constructed cottage sitting on the exact same land for a total price of $100k you can get a standard loan (no PMI) by putting down 20%, which is $20k. That's $2k less than without the house. Bear in mind that you can get a decent home loan with 10% or even 5% down. Ain't no way you're ever going to get a long term land loan with that little down.

    Then there's the interest rate. If you can even find anyone to give you a long-term loan for just the land (which I doubt) the interest rate would be ridiculous. That's true of almost any oddball loan. An unusual risk means less certainty which they have to offset with high interest rates. But a conventional loan puts you back into the realm of normal rates. On a 30 year loan at 12%, your $55k land loan would cost you $565.74 a month, while a 30 year loan at 7% on a $100k home loan would be $665.30 (I'm ignoring down payments in that calculation so it would really be less than that).

    Only $100 difference in monthly payments and you have to come up with much less cash up front. Plus you would have the new house that you built.

    Is it stupid that you have to do this kind of thing in order to get onto the land that you want? Yep. But it still might be the most practical way of getting what you want.


    FYI - I'm a financial professional who deals with mortgage companies and residential construction costs every day, but I am not a mortgage broker.
     
  12. Jan Doling

    Jan Doling Well-Known Member

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    BlueJuniperFarm has a good idea. In the Caribbean islands credit is not used. The husband-to-be buys a lot, then builds a one room starter cottage for himself and the bride. They don't marry until this is done. As children arrive, rooms are added to the cottage so that by the time the children are raised, the house is complete and all paid for.
     
  13. leaping leon

    leaping leon Well-Known Member

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    I'll say some prayers for you. We've had to deal with similar problems, but here in Florida we can get ten year land loans, but the interest rate is higher than for land with a "regular" home on it. Our mobile home is over twenty years old, in pretty good shape, but banks won't even hear of offering anything on a mh this old. I finally got our land, with some help from my mother, but it's not been easy...we've been stuck making mortgage payments, AND rent payments, for 15 months because our contractor didn't know how to handle land improvement when you're moving a used mobile home onto it...the contractor was trying to get us to violate the county building code that covers the plumbing and electrical installations...so now I've got to be our contractor and I have absolutely no experience...
    I'm not as frightened of the economy as BlueJuniperFarms, but I have had some bad things happen after taking on a big mortgage...my ex had to have this house that was at the upper end of what we could finance, and I said "What if something happens, like you or I lose our jobs, or one of us gets sick and the insurance won't cover it"...AND all three happened within five years of buying this house...I still have not recovered financially...But thanks be to God, I have other things that compensate...
     
  14. Siryet

    Siryet In Remembrance

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    We bought our place in AR and it had been financed by Wells fargo. Got to a mortgage broker not a bank and see if they can help you.

    Our mortage broker got us a mortgage while I was on the phone with him, 1 hr and approved. i couldn't believe it, But I have good credit (Luck) and we put 20% Down.


    opps, we have a regular stick built house but I don't know iff that made any difference. The 20% really made it easier to get the mortgage.