Ah – fresh air, wide open spaces, and privacy! It’s an exciting milestone to purchase your own rural land. But what do you need to know before closing? Let’s look at some of the top questions from potential and current customers about loan rates and fees:
If I’m buying vacant land, what kind of interest rate will I get?
First and foremost, all loans have different interest rate options. When looking to purchase rural land, you’ll find different rates available to you than those you would get when financing a home. The reasoning is based on the market and the risk.
For example, in the event you have a home loan and a vacant land loan and are unable to make both payments, most will choose to pay the house loan before the land loan. Typically, a vacant land loan rate will be about one percent higher than a home loan. A loan for a parcel that’s over five acres will have a rate a quarter of a percent higher than properties under five acres.
In addition, GreenStone offers 30-year fixed or adjustable rate mortgages on vacant land. We are one of the only lenders that will do a 30-year fixed rate this way, and many customers find this long-term loan to be an attractive feature. GreenStone also does not require you to build on the land like some lenders stipulate.
What fees do I have to pay, including for closing?
On a vacant land purchase, typically customers will make a 20% down payment, plus closing costs. In certain instances, you may be able to put 15% down with a 30-year term or consider using other property as a form of collateral to meet some or all the down payment requirements. Among the closing costs, the origination and stock fees are the only two that go to GreenStone; the rest go to the external vendors who completed the work, such as the appraiser and title company.
Fees that may be included in the closing costs include the appraisal, title, recording, and company closing fees, as well as fees to obtain a flood certificate, credit report, survey, or home inspections. These fees are variable based on the loan. Your financial services officer will provide you with an estimate of these fees.
Are there prepayment penalties?
Good news! GreenStone does not have prepayment penalties. You have the flexibility to pay as much as you want, when you want.
What kind of perks does GreenStone offer?
Another benefit of partnering with GreenStone is the portion of our earnings we give back to our members each year in the form of Patronage. As a cooperative, GreenStone returns a portion of our annual earnings each year to our member-owners in the form of a dividend based on the value of active loans, that we call patronage. When our members are successful, we’re successful! This is a direct result of the relationships we’ve built with our members, and your trust in GreenStone.
Another benefit of working with GreenStone is the opportunity to obtain an interest rate conversion should a lower rate become available to you. An interest rate conversion provides you with the opportunity to lower your interest rate expense in a declining rate environment.
Compared to refinancing, an interest rate conversion is a streamlined and cost-effective process that allows you to pay less interest over the remaining life of your loan and potentially pay it off earlier than expected.
Learn more about the top three questions to ask when purchasing vacant land from Ashlee Guerrero, VP of Lending at GreenStone, by viewing the video linked below!
