Do you dream of owning land in the countryside? Whether you plan to create a place to escape from the hustle of city life or use the acreage for fishing and hunting or horseback riding, Rural 1st is here to help.
Our team lives and works in the rural communities we serve, and are ready to help finance your dreams of country living. The process of buying land can be daunting, but we’ve broken down the financing process into four key steps.
Step 1: Identify How You Plan to Use the Land
The possibilities are endless with rural land. Rural land can have something for everyone, from using your land to grow wildflowers to fishing in a pond. It’s vital to begin your land-buying journey with a clear vision of how you plan to use it. This will help you focus your search and save time by avoiding rural properties that don’t match your needs.
For example, if you plan to use your land strictly for outdoor activities such as hunting or four-wheeling, you’ll want to ensure there is wooded acreage to attract wildlife or enough space for trails wide enough for ATVs.
Step 2: Identify the Right Partners for Your Project
Connecting with experienced realtors and other land experts, like those at Whitetail Properties Real Estate, LLC, who understand the nuances of rural living and financing, can help streamline the process. A well-versed realtor will help you navigate deed restrictions or zoning issues associated with specific properties.
Once you’ve identified that perfect piece of land, work with a lender who understands and can appraise its full value. Your lender can also help secure financing for improvements such as utility installation, erosion or flood risk mitigation, and access from the road.
Step 3: Get Prequalified for a Loan
Prequalification is an important early step every borrower should take before putting in an offer on a piece of land or attending an auction. Getting prequalified for a land loan helps you know how much you can afford, lets you focus on properties within your budget, shows sellers you’re serious, and gives you an advantage by proving you’re ready to buy.
In order to prequalify, you’ll need to be prepared to share the following with your lender:
● Income documentation, including pay stubs, bank statements or employer letters
● 2-3 years of federal income tax returns
● Asset verification forms that prove you own certain assets, show how much they’re worth, and confirm they’re real.
A loan officer will help guide you through the documentation needed for prequalification. They can also discuss your budget, secure the best terms and interest rates, and explain what’s required to close the loan.
Step 4: Understand the Loan Application Process
Once you’ve navigated the first three steps and have identified the perfect piece of land for your needs, it’s time to officially apply for a land loan. To apply, your lender will need everything you provided during pre-qualification as well as a few additional pieces of information.
If you’ve already signed a purchase contract, include it in your loan application. Your realtor usually prepares that document, which includes:
● Buyer and seller names and contact information
● Property details
● Purchase price
● A statement of facts about the condition of the property
● Contingencies
● Financing details that explain how the buyer is paying for the property
● The planned closing date
Land financing requires an appraisal or survey, usually scheduled by the buyer and included in closing costs. This document provides the land’s estimated value, size, boundaries and use restrictions.
Your lender will also review the property deed to ensure legal access to the land, especially if it’s surrounded by other properties, and check for any associated mineral rights.
During the loan application process, you’ll also get information about any easements associated with the property. This will either be disclosed by the seller, uncovered during a title search, or provided by the local assessor or county clerk’s office. For example, if the property has a shared driveway, the neighbor may grant an easement allowing you to use part of the driveway to reach your property.
Once the required documents have been analyzed and the loan has been approved, you’ll close on the loan and start living your rural dream.
“After working with a customer and helping them navigate all the nuances of purchasing rural land, I think I’m as excited as they are to see that piece of property become theirs,” says Kaleb Barton, a loan officer with Rural 1st in Colorado. “My love for rural living is what drew me to Rural 1st, and it’s rewarding to help others pursue that same love for the land and open spaces.”
Ready to kick start the land-buying process? Connect with a Rural 1st loan officer in your area to get started.
