Personal Line of Credit to buy raw land...yes/no?

[Tonydga]

Not sure if this is the right forum, but I am interested in purchasing raw land and my question is...would it be better to get a personal line of credit to purchase the land or try to get a land loan? I know that getting a land loan can be tougher than that of a traditional mortgage and can require a large % down payment, so I just want to go with the best option.

My credit score is 700 and I do have a secure job and income.

[StartingOver10]

How large is this parcel? It makes a difference.

You can get a LOC, but also consider seller financing. It is very common for seller's to hold the note on a parcel of land they are selling.

[Anonymous]

I'm speculating, but I would assume that a personal line of credit, since it's only backed by goodwill, would have a higher APR than a land loan, which is secured by the land. 

[coterotie]

The answer varies based on your responses to these questions:

1. What type of land is it?  Residentia, Commercial, Timber, Undeveloped/Unzoned Raw land which has had no suitability studies etc. performed on it.
2. Why are you buying the land?  Based on the above answers, build a house for yourself, build a house as speculation, build a building to lease out, build a building for your own business, hunting/recreation, pure speculation (like you know their is a road coming and you want to buy ahead of the crowd)
3. Tax situation, looking to shelter, looking for depletion

With these answered they way you finance the land will become very clear.

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@Tonydga wrote:

Not sure if this is the right forum, but I am interested in purchasing raw land and my question is...would it be better to get a personal line of credit to purchase the land or try to get a land loan? I know that getting a land loan can be tougher than that of a traditional mortgage and can require a large % down payment, so I just want to go with the best option.

My credit score is 700 and I do have a secure job and income.

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[Tonydga]

The land is about 7 acres and the seller isnt looking to finance. Land is wooded with a small stream. My plan is to build a house on it within the next 5-6 years

[coterotie]

Then I would go here:

http://en.wikipedia.org/wiki/Farm_Credit_System

Each state has Federal Land Banks.  They will loan up to 100% of the purchase price.  Google your state and locale and find one to call up.  I have found them to be extremely helpful, kind of like a credit union and FHA rolled into one.

Talk with an accountant, but you might even see some tax savings if you approach this correctly.  (think depletion)

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@Tonydga wrote:

The land is about 7 acres and the seller isnt looking to finance. Land is wooded with a small stream. My plan is to build a house on it within the next 5-6 years

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[Tonydga]

Thank you so much!!!