| California Land Financing Budget (Example):Land | | | | borrow than on a residential home loan. There is a |
| Purchase Price $300,000 Land Purchase Price | | | | larger down payment expected typically than a |
| Soft Cost of Construction $ 40,000 Plans and Permits | | | | California residential house or condo. There is more |
| | | | preparatory work expected also. Lenders may expect |
| Hard Cost of Construction $350,000 Construction | | | | the borrower or buyer to bring a variety of items to |
| Costs | | | | the lender's table for a construction loan. Here is a |
| Closing Costs $ 22,000 Fees, Title, and Escrow. | | | | partial list of potential requirements some lender's |
| 5% Misc. Reserve $ 17,500 5% of Construction Costs | | | | stipulate in order to obtain a land loan:Complete and |
| | | | permissible architectural drawings for what will be built |
| Loan Interest Reserve $ 35,000 Interest On Amount | | | | on the land.Detailed time tables for all aspects of |
| Drawn | | | | construction.Finalized realistic budget for the |
| Total Building Cost $764,500 | | | | building.Supervisory chart, including a list of builder |
| Appraised Value $800,000 Estimated Value of Land | | | | contact information for contractors and the architect |
| with Building Completed | | | | assigned.Proof of bonded and insured builders and |
| Down Payment $191,125 25% of $764,500Benefits of | | | | contractors.Here is a list of the paperwork required |
| California Land LendersLoan officers dealing with | | | | from a borrower to get started on a land loan in |
| California land should be able to assist you with the | | | | California:Last 2 years of your federal income tax |
| following information:Assessment of the estimated | | | | statements.Last 2 months of pay stubs for both you |
| yearly taxes, insurances, and HOA fees. | | | | and your spouse with contact information.Your |
| Approximate interest rate for the loan. Down | | | | property information if you currently own including tax |
| payment required.Interpretation of your personal | | | | statements, HOA statements, any current mortgage |
| financial statements, credit scores, and income-to-debt | | | | statements, and any other debt statements you |
| ratios to conclude your eligibility.Utilities Lead to the Path | | | | currently have.Any additional proof of income streams, |
| of FinanceOne important thing to consider as you look | | | | including child support, trust fund, investment income, |
| to buy California land is utilities. When construction | | | | dividends, interest, rental income, social security or |
| developers go into the construction stage to build new | | | | government monies.A complete list of your bank |
| homes in Southern California then roads and utilities are | | | | accounts and documentation, including all your checking, |
| built for a large number of homes. When the lender | | | | savings, money markets, and banking information.Some |
| knows that a lot has public road access and utilities | | | | Negatives and PositivesOne draw back is that the |
| nearby they are often more willing to supply financing | | | | courts of law in California have less regulations to |
| for the land because there is a foreseeable capacity | | | | protect the interests of land buyers than they provide |
| to build on it which increase the California real estate | | | | to California residential home buyers since a land |
| worth and lowers the risk to the lender. The cost of | | | | purchase is considered an investment. On the positive |
| installing utilities on a lot is not considered part of the | | | | side, land is like having a clean slate of property. |
| hard construction costs for building.Land Loans from a | | | | California land buyers have a much easier time when it |
| California Lender's POVCalifornia land loans are more | | | | comes to planning what they want to build, as long as |
| risky to lenders than residential loans. The reason for | | | | the building plans live up to the regulations and zoning |
| this is that normally most people do not live on the land | | | | requirements of the city for the land's location. As a |
| they buy since it's vacant. As a result it is industry | | | | land buyer CA you also have much more flexibility on |
| practice to not consider land a primary residence until | | | | getting what you want than doing a residential home |
| something is built, and so it follows that vacant land is | | | | remodel for example.The best part of all about |
| called investment property even if a person intends to | | | | obtaining a loan to buy land in California is that it forces |
| build on it in the near future. Also, vacant land is called | | | | you to think through the land buying process ahead of |
| commercial property in California, that is property used | | | | time, talk to the right people which you will need to help |
| for an investment purpose, even if the land is zoned | | | | you build a new home in Southern California and make |
| residential and there are plans in place to build a | | | | a financial budget with sensible deadlines so that |
| primary residence. The importance of this | | | | ultimately you can become a true player in the future |
| categorization for lenders is that their risk increases on | | | | development of a community for all to see. Plus you |
| lending for land because a person can walk away | | | | will have a really cool story about your personal |
| from a land loan easier than a loan on a primary | | | | experience in the timeless process of building on |
| residence since the borrower has another place to live | | | | California land. |
| hypothetically.Lenders for land will expect more from a | | | | |