3 Requirements for a Bad Credit Land Loan
Even with a bad credit score, a bad credit land loan is not out of your reach. During this recession, the real estate market is struggling. Bad credit land loans are difficult, but not impossible. Research several lenders to find the best deal you can.
Getting a bad credit land loan can be easier than you think. New lenders are popping up all over. Check into several to get the best rates and terms possible. Remember, with bad credit, you will have higher interest rates.
First, to apply for a bad credit land loan, you must be at least 21 years old, and prove that you have a steady income. How much you can borrow will depend on how much the land will cost.
Get together as much as you can for a down payment. The average down payment for a bad credit land loan is 40% to 60%. Collateral is also a good thing to have ready. The larger the down payment, the more collateral and/or cash you will need. Collateral can be other property you own, or equity you have in other property. Keep in mind whatever you use for collateral will be lost if you default on your bad credit land loan.
Have a plan for your property, in writing. Be sure that you can do everything that is needed to satisfy the lender that you can repay the loan and make the necessary improvements to the land. Land loans can be lost if you don't have feasible plans in place. Unlike personal or other loans, what you plan to do with your land will have an effect on qualifying for a bad credit land loan.
Tips for finding the best deal
The average down payment for a bad credit land loan is 40% to 60% of the total loan. By shopping around, you can find an offer for around 20% down.
If the land you are purchasing is raw, or undeveloped, talk to local lenders. Since the plan will have bearing on getting the loan, a local lender will be more sympathetic to the development of raw land in your community.
The right loan may help your credit score
Finding the right bad credit land loan will help your credit score, as long as you make the required payments and are not late. Choose the shortest maturity term with payments that you will be able to honor. Once your bad credit land loan is paid off, your credit score will dramatically improve.
Don't get discouraged if you don't find the right loan right away, keep looking and stay prepared. Don't loose your job. Don't spend your down payment. Just keep looking. A good lender will help you gather everything you need to get that bad credit land loan and get your credit on the right track.