Ah – fresh air, wide open spaces, and privacy! It’s exciting to purchase your own rural land. But what do you need to know? To navigate the process, GreenStone’s country living financial services officers can answer your questions about loan rates and fees.
Let’s look at some of the top questions from potential and current customers:
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 land, you’ll find different rates than those financing a home. The reasoning is based on the market and the risk. For example, if someone has a home loan and a vacant land loan, and has a life event that causes their inability to make both payments, most would choose to pay the house loan before land loan. Typically, a vacant land loan will be about one percent higher than a home loan. A loan for a parcel that’s over 10 acres will be a quarter of a percentage more than under 10 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 may stipulate.
What fees do I have to pay, including for closing?
On a vacant land purchase, the customer will have the 20% down payment, plus closing costs they will need to bring to close. 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 are the appraisal, title, company closing fee, flood, credit, report, recording, survey, inspections, etc. These fees are variable based on the loan. Your financial services officer will be able to give you an estimate of these fees.
Are there prepayment penalties?
Good news! GreenStone does not have prepayment penalties. Pay as much as you want, when you want.
What kind of perks does GreenStone offer?
Many times, customers choose GreenStone after calculating our Patronage payment. Since GreenStone is a cooperative, we give back a portion of our annual earnings each year to our member-owners in the form of patronage.
What does this mean? Here’s an example of how you could benefit (the amount returned to customers changes annually based on the cooperative’s profits). If your loan rate is 4%, then effectively when you are paid your Patronage payment, you could get back about 1% of the interest paid, meaning you’re really paying around 3%, maybe less. Be sure to consider this point when you’re comparing loan rates.
What are the top three questions you need to ask when purchasing vacant land? Let's watch as Ashlee Guerrero, Vice President of Lending at GreenStone in Ann Arbor, shares her financing expertise.
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Apply Now | Recreational Vacant Land | Payment Calculator | Patronage
