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