Lot Loans

GreenWaveDave · 12-15-2008, 12:27 PM

Are any banks financing vacant lot loans down there right now?

If so, which ones and what kind of rates, LTV's, terms, are people seeing?

TooFarTampa · 12-15-2008, 12:33 PM

They are really hard to get.

The best deal we could find a couple of months ago (right before the credit market began imploding) was 7.25 percent through Huntington Mortgage. Their service was good and everything went smoothly. They wanted either 80 or 90 percent loan to value, I can't remember.

We tried a mortgage broker and he was talking about 9 percent. Another broker didn't have anything for us. Wells Fargo was at 8.25 percent I believe with 75 or 70 percent loan to value. USAA was the second best deal (7 3/4 or 8) but wanted about 70 percent loan to value.

Good luck!

nowgirl · 12-15-2008, 01:20 PM

Destin First Bank 269-1201 or Compass Bank 269-6992
Should be able to get 7% or possibly lower.

Joe Mammy · 12-15-2008, 03:49 PM

I have a closing tomorrow on a Bayfront lot in Walton County. My clients got good faith estimates from Compass Bank, Sunshine Mortgage, Wells Fargo and Florida Financial Services.

They ended up going with Compass on a 80% LTV 5 year balloon amortized over 180 months for 5.5%.

TooFarTampa · 12-15-2008, 10:16 PM

Quote:

Originally Posted by Joe Mammy

I have a closing tomorrow on a Bayfront lot in Walton County. My clients got good faith estimates from Compass Bank, Sunshine Mortgage, Wells Fargo and Florida Financial Services.

They ended up going with Compass on a 80% LTV 5 year balloon amortized over 180 months for 5.5%.

I would stay away from a balloon unless you are sure that you will be able to pay it off in 5 years or that the lot will not be worth less. If it's an expensive lot, it would be rather painful to bring tens of thousands of dollars to your own refinancing.

MissCritter · 12-16-2008, 06:27 AM

Quote:

Originally Posted by TooFarTampa

I would stay away from a balloon unless you are sure that you will be able to pay it off in 5 years or that the lot will not be worth less. If it's an expensive lot, it would be rather painful to bring tens of thousands of dollars to your own refinancing.

Is a balloon a good idea if you know you will build on it within the 5-year time frame? How are construction loans faring?

TooFarTampa · 12-16-2008, 06:59 AM

Quote:

Originally Posted by MissCritter

Is a balloon a good idea if you know you will build on it within the 5-year time frame? How are construction loans faring?

Don't know anything about construction loans. But if you KNOW you will build, then a balloon is just fine.

We bought a lot five years ago with every intention of either building or selling by the time our balloon loan ended. Things change. We definitely plan to keep the lot, but may not build for 10-15 years.

Refinancing our balloon was a bit tricky because not only did we have trouble finding a non-balloon loan, the lot appraised for a ridiculously low price even by today's standards, 20 percent less than we purchased it for in 2003. The only comps the bank came up with did not have a gulf view, which our lot has. The bank reviewed the appraisal and the refinancing eventually went off without a hitch. But it was still a reminder that a so-called end user without payment issues and acting in complete good faith could get caught in the downward real estate spiral.

I tell the story just as a warning.

Beach Runner · 12-16-2008, 07:20 AM

Then the next question after getting loans for the lot and construction is how hard is it going to be to find wind insurance if the lot is south of 30-A? I'd hate to have jumped through the hoops of financing and built a house for which I can't get insurance.

AAbsolute · 12-16-2008, 07:29 AM

Quote:

Originally Posted by Beach Runner

Then the next question after getting loans for the lot and construction is how hard is it going to be to find wind insurance if the lot is south of 30-A? I'd hate to have jumped through the hoops of financing and built a house for which I can't get insurance.

New construction will be wind insurable.

You may want to take a lot loan that contains a future advance clause. It's a standard provision that may help you later. Many times the future advance provision totals twice the lot loan.

Miss Kitty · 12-16-2008, 07:50 AM

Gives new meaning to the phrase...dirt cheap!

Beach Runner · 12-23-2008, 08:49 AM

Quote:

Originally Posted by AAbsolute

New construction will be wind insurable.

You may want to take a lot loan that contains a future advance clause. It's a standard provision that may help you later. Many times the future advance provision totals twice the lot loan.

Thanks for the info!

wrobert · 12-23-2008, 08:58 AM

Are the problems the county is starting to see with incomplete infrastructure affecting the ability to finance yet? Buying a lot then finding out two years from now the county will not issue you a building permit has got to be a concern of people if they think about it.

Franny · 12-23-2008, 09:05 AM

Quote:

Originally Posted by wrobert

Are the problems the county is starting to see with incomplete infrastructure affecting the ability to finance yet? Buying a lot then finding out two years from now the county will not issue you a building permit has got to be a concern of people if they think about it.

In this scenario it sounds like this couple bought to build their own home so there should not be a problem with financing. Building spec homes is a whole new ball game.

wrobert · 12-23-2008, 09:10 AM

Quote:

Originally Posted by Franny

In this scenario it sounds like this couple bought to build their own home so there should not be a problem with financing. Building spec homes is a whole new ball game.

I guess the scenario I had in mind is the lot is purchased with a five year balloon. The plan is to build a home in 3 years. Three years from now when they go to build their home they find they can not get a building permit. Now they have two years to get this straightened out or the balloon payment is due. Or they go forward with a construction loan, but I am sure that there are some time limits placed upon that.

I know five years seem like quite a bit but we already have places that have been out of compliance for a couple of years and the county is just now starting to take action against them. The county attorney stated at the last BCC meeting that the county had no liability in these situations, although others seemed to disagree.

Franny · 12-23-2008, 09:12 AM

Good points.

AAbsolute · 12-23-2008, 10:21 AM

Quote:

Originally Posted by wrobert

I guess the scenario I had in mind is the lot is purchased with a five year balloon. The plan is to build a home in 3 years. Three years from now when they go to build their home they find they can not get a building permit. Now they have two years to get this straightened out or the balloon payment is due. Or they go forward with a construction loan, but I am sure that there are some time limits placed upon that.

I know five years seem like quite a bit but we already have places that have been out of compliance for a couple of years and the county is just now starting to take action against them. The county attorney stated at the last BCC meeting that the county had no liability in these situations, although others seemed to disagree.

The first home I built in Rosemary Beach had no water or power when we began construction because the utilities weren't to our phase of the neighborhood. I would think it's not part of reasonable due dilgence to verify the existance of working utilities when you buy a property that has stub-ups visible when you close on the property.

I've seen the same type of situation in the newest phases of other communities here as well. It will create a liability situation for the Developers, the County and probably Regional Utilities who collects water and/or sewer tap fees at closing as next year unfolds.

I remember the HillsByTheBeach thread where she had a client who bought property under an infrastructure bond that expired later leaving the bank and owner with property without ingress/egress.

traderx · 12-23-2008, 10:33 AM

I am surprised that you were able to pull a permit without utilities to the site. Was that a mistake by the county or typical MO?

AAbsolute · 12-23-2008, 10:53 AM

Quote:

Originally Posted by traderx

I am surprised that you were able to pull a permit without utilities to the site. Was that a mistake by the county or typical MO?

The County Building Dept. has prerequisites for permits that include Water and Sewer availability letters. That has a subtle distinction between functioning services and their availability. We have permitted homes with payment of $6,800+ water and sewer tap fees paid and at CO come to find that we had to assemble a shallow well to pressurize our plumbing system for the final inspection. This happens most in a new phase of a development. There is quite a difference even in a community's water main that is pressurized and a water main that has been certified by the DEP to deliver water to a home.

These types of conditions can mislead the best banks at the point of sale of purchasing a lot, let alone an out of State lot buyer who doesn't possess extraordinary experience levels. Who would even think to ask, "I see the water and sewer stubs. Has this system passed its DEP Certifications for use?"

simmy587 · 12-26-2008, 12:31 AM

Hi Wavedreamdave,

I am sure bank finance vacant lots. All you need to do is find a legitimate and reliable real state agent to talk get a deal with and know all information you want to know.