Loan Options Land >35%

[meledward23]

Anyone have this problem?

The bank says you want a loan for 250K sure no problem. The house appraises for more than the loan value. But then the hammer drops, the land appraised equal to the house value which exceeds 35% therefor no loan or I can do a land loan of 15% down and a 1yr ARM.

Obviously this is not going to work.

So now I am left wondering.... will I run into this problem at all banks or just this one. No one has discussed the 35% land to house value before. I more or less understand the banks point, but doesnt mean I want to go their way.....


[img]/forums/images/icons/confused.gif[/img]

[rcaretti]

I'm not sure what the loan is for? If it's for building a home it should be doable.

I purchased property and built a house a few years ago where the land value was somewhat greater than 35% of the total value.

We did a construction loan to purchase the land and house and converted to a 30 year fixed at completion.

[GAFarmer]

Never heard of such a thing before. [img]/forums/images/icons/shocked.gif[/img]

[cowboyjg]

Allow me to assume a few things and then present this scenario.

I assume that the loan is to purchase an existing house with property and not a refinance. The land loan part seems to suggest that they want you do divide it into two loans and two pieces of property???

The key here becomes a Fannie/ Fredie thing. They do not like going outside the box when it comes to motgage loans. Typically the ratio is 60-65% house to land valuation. Your local bank or broker wants to sell the loan to fannie or freddie. Can't do this if it is outside the box. There are regional influences too. Large pieces of land ie: house with acreage are typical in some parts of the country and not others. This makes the box a little different for everyone.

When a property appraises way above or below the purchase price it raises flags from an undrwriting standpoint...They think something is "fishy".

Your lender may be ultra-conservative or thinks you're not too bright.

Working with a broker rather than a bank, unless the bank is large (and I mean LARGE), is more than likely the way to go. Inquire about a portfolio loan if it doesn't fit inside the box. 10 - 20% is typical downpayment requirement.

There are so many other factors involved that beyond this it becomes difficult to give advice. Things like credit history, income, is this primary, secondary, or investment purchase etc.


Hope this helps. Good luck with your adventure.

[Gatorboy]

This is off-topic, but cowboyjg, you may want to update your profile to display the proper web address of your profile picture. The Red-X is probably not what you intended, but rather this is:

[cowboyjg]

roger that.....Thanks [img]/forums/images/icons/grin.gif[/img]