Land in Lieu Manufactured Home Loans: A Way Forward
According to the U.S Census Bureau as of July 2018, just 64% of Americans currently own their home. The rest of us often feel that we can not afford a home’s down payment, so some choose to rent or seek other options. However, for those that either own or come into land for one reason or another, there is an option to get the financing needed to build a custom dream home. Many lenders will allow land to be used as collateral instead of a cash down payment when obtaining financing to purchase a new home. It doesn’t matter if you bought the land or got it as a gift either, so long as the land is close to the value of what you’re seeking to get from the bank you’re set to start seeking options for that much-needed loan. Using Land in Lieu Manufactured home loans gives you the adaptability and power of a cash down payment, no matter your financial situation.
Basics of Land in Lieu
Land equity does have a different immediate functionality than a cash down payment. It will not lower your actual loan amount like a cash down payment, but it can be used to secure the loan in the first place. The amount of land equity needed will depend on the borrower’s creditworthiness and the amount requested in the loan. Creditworthiness is determined by each specific lender’s criteria. The lender will hold a lien on the land used as collateral as well as the home, with all liens being released when the loan is paid in full.
As long as the land is clear of any existing liens and is a certain amount of the sales price, determined by the lending house itself, any land can potentially qualify for a land-in-lieu. The amount of equity required is based on the borrower’s loan package itself. An $80,000 home requiring 20% of the sales price for the land would mean that your land to be offered as collateral would have to be worth $16,000 in land equity. If you did foreclose on the loan, that land is forfeited to that lending house.
An appraiser or tax assessor usually appraise the land and is always a neutral third party to ensure fairness and unbiased assessments. If the land equity does not meet the required percentage, the borrower can talk to the lender to learn about their alternative options. Because manufactured or prefabricated home prices are drastically lower than the starting price of a new site-built home with land, they can be a smart option for a down payment. It’s something to consider and does not take a lot of effort or add stress to make the payments ready right away. Giving you the breathing room to focus on the house you’ve been searching for.
A Liberating Option for Manufactured Home Shoppers
A Land-in-Lieu manufactured home loan mortgage package could be the perfect helping hand to getting your family into a beautiful manufactured home today! Check with these lenders to see if this option is right for you! Or learn about other options here.