Cash transactions comprise the majority of lot purchases done in the Tucson area, but there do exist several financing options as well. Here are some brief explanations and resources for financing the purchase of vacant land.
Seller Carryback
Seller Financing has existed probably for as long as real estate transactions have occurred, but they’re not as commonly done anymore. Most single family home transactions that are financed go through traditional lenders now. However, land transactions remain one area where you do see seller financing more prominent. In this case, the Sellers of these lots will potentially consider seller financing on a case by case basis.
This type of financing is essentially where the seller of a property acts as a lender to the buyer. Usually the buyer must still come up with a substantial amount of money for the down payment to lessen the risk for a seller and cover the seller’s upfront closing costs. Another common feature is most seller financing is for a much shorter duration, between 2-5 years commonly, with a balloon payment at the end of the term. Specific terms of the interest rate, term of loan, amortization, and more is part of the negotiated offer.
The benefits for a buyer is that the process can be much simpler than dealing with a financial institution. Other times the terms negotiated may be more beneficial than offered by lending institutions, or some buyers who might be self-employed or business owners have more unusual qualifying circumstances while still being able to easily afford a property. There are many rules and guidelines in place regarding seller financing that must be adhered to, so contact Team Woodall for additional details. We’ve successfully negotiated several deals with seller financing.
Lot Loans Through a Bank
While most of the “major” banks don’t offer loans for vacant land, there are a number of local credit unions and more specialized banks that do have loan programs for vacant land. Most of these lot loan programs require at a minimum 20% down, but more commonly 25% or 30% as a down payment. They’re also usually for a shorter term than a traditional loan on a single family home and rates do vary. Here are a list of some of the ones we’ve referred people to in the past, but please let us know if you require additional references as at least 4-5 more do exist that are reputable:
OneAZ Credit Union
Janine Grimes
Phone: (520) 784-5020
Email: jgrimes@oneazcu.com
Washington Federal
Dannielle Andrade
Phone: (520) 296-3203
Email: Dannielle.andrade@wafd.com
