Have you been experiencing a slowdown in refinance requests? At Finance Factors, we’ve seen an influx of land loan inquiries and are one of the few lenders in Hawaii that can provide your client with financing for acquiring a vacant lot or tear down property. So, call us today and expand your loan opportunities in 2013!
Below are the most common land loan financing situations that you will come across, and how Finance Factors stands apart from the rest. For more details on our guidelines, check out our Land Loan Financing Program flyer:
Vacant Lot Purchases
We will finance up to 75% of the purchase price or appraisal for residential-zoned lots, and up to 70% LTV on agricultural-zoned lots.
How are we different? As part of the process of underwriting the land loan, we also evaluate the borrower’s ability to qualify for construction financing. We want to make sure that the borrower does not end up owning a lot but then he or she is unable to take the next step and build on it.
Lot Purchases with Property in “Tear Down” Condition
Similar to a vacant lot purchase, when the condition of the existing home is too poor to give it any value in the appraisal, we can do a land loan instead of a long term loan.
How are we different? We may recommend doing a long term loan instead of a land loan under certain circumstances. In particular, in those instances where borrower intends to keep the dwelling to make repairs and verifies the additional reserves to complete such repairs. However, we still would evaluate loan-to-value on site value alone without consideration of the value of the improvements.
Cash-Out Refinances of a Vacant Lot
Got a client that doesn’t want to deal with the paperwork required of a construction loan? Finance Factors will do a cash-out refinance under the following conditions:
- Loan-to-value does not exceed 50% of the appraised value of the property or the purchase price (if acquired in the past 12 months from the application date).
- The borrowers can demonstrate that they have the resources (including the cash out from the loan) to build the size and style of dwelling that they say they are building.
- The size and type of future dwelling is representative of the neighborhood.
We will not do a cash-out refinance that is intended to consolidate bills or to pull money out of the property for any other purpose than future construction.
Refinances of an existing Land Loan
During the boom times of the 2000’s, there were several lenders locally and from the mainland making land loans. In 2012, many of these same lenders stopped making land loans and granting extensions to maturing land loans.
How are we different? Finance Factors will consider a refinance of these maturing land loans under the same guidelines as a cash-out refinance request detailed above: 50% LTV and the means and resources to build on the property.
Call us today if you are ready to fill your production pipeline with clients looking for land loan financing! Finance Factors is here to help!
