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Physician Mortgage for "raw land"

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  • Physician Mortgage for "raw land"

    Does anyone know if one can use a physician mortgage to buy land without immediate plans of developing it / building a home on it? Anyone have any personal experience with this?

  • #2
    I asked 3 banks near me, and all said no. They suggested I save cash, find a HELOC, or get a construction loan (build w/in x/months), then roll into a regular mortgage.

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    • #3
      We're buying some land next month. I contemplated a HELOC or trying to finagle some 0% credit card cash advances, or even a 401(k) loan, but the simplest answer is to sell some recently purchased funds from my taxable account. I'll end up taking at least a few thousand dollars in short-term capital gains, but fortunately, I have about $40,000 in carryover losses from Tax-loss harvesting in 2016 to negate the potential tax hit.

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      • #4
        Adventure - what did you end up doing? did you get the land?

        I unfortunately don't have the ability to get a HELOC because I sold my "resident house" last year and used the profits to pay down student loans. I'm thinking about talking to some local banks in the area where I'm looking to buy the land because I think they'll have a better idea of what its worth. This land has no road access (got there via a logging trail in a large truck however), no utilities or really any improvements at all, so I'm worried that my only option would be to get some sort of commercial loan in which I probably won't have enough for a down-payment and the term will be short and interest rate high.

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        • #5


          Adventure – what did you end up doing? did you get the land?
          Click to expand...


          Still saving... How long until you could save up cash for it? We're months and months away, if we delay student loans.

          I another separate conversation with a banker, I found out I could get a "personal loan", about 6-7% interest, no collateral. I'm not interested at those high rates. Not a great option, so the savings continue.

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          • #6
            And that is why we have taxable (accessible accounts)! Boom! I hate when people refuse to touch these funds like they are some holy grail. If you need money, you have taxable accounts, then you in essence have the money to buy that thing you want.

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            • #7
              Have you checked with your local farm bureau?  They will likely finance raw land and their rates are usually very competitive.  BTW, you dont have to be a farmer to use their services

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              • #8
                I second the farm bureau thing. Borrowed money to buy raw land to build a home. Interest rates higher than traditional mortgage though.

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                • #9
                  I have not checked with a farm bureau yet, but that is a good idea. The property I'm looking at is about 200 miles north of where I live, so I figure my best bet would be to find someone (bank, farm bureau) local to the area of the property to get financing through since they're likely more familiar with the area and value of the land.

                   

                  Braceurself - if you don't mind me asking, what rate/term did you get on your loan? And was it a commercial loan? Did you have to provide plans for your future build plan, etc?

                  I wouldn't have immediate plans to build on the property which I understand might be unappealing to some lenders.

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                  • #10
                    i have bought several pieces of raw land in last 10 years.  all financed through local bank.  interest rates have been between 3 and 4%.  i am a in a small rural area so banks love to get doctor clients and will give good rates.  but they are all 5 year balloon notes.  but it forces me to pay them off quick, so thats been fine with me.  last was about 3 years ago.  i assume rates are a bit higher now. many friends have used farm bureau with good results

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                    • #11





                      Adventure – what did you end up doing? did you get the land? 
                      Click to expand…


                      Still saving… How long until you could save up cash for it? We’re months and months away, if we delay student loans.

                      I another separate conversation with a banker, I found out I could get a “personal loan”, about 6-7% interest, no collateral. I’m not interested at those high rates. Not a great option, so the savings continue.
                      Click to expand...


                      I could save up quite a bit very soon. I'd like to put a lot of $$ toward student loans, but Im just about to start my first "real job" so I should have a high enough income to max out my retirement accounts, put a lot towards my loans and even save some for this property. Its possible that with summer coming to an end this land will be available for a while (this type of land is not a hot commodity around here in the colder months), so I could save for a while and probably get better financing options. Its listed at $279k so even if I could haggle the price down it would still take me some time to save enough to pay for it all cash.

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                      • #12


                        I could save up quite a bit very soon. I’d like to put a lot of $$ toward student loans, but Im just about to start my first “real job” so I should have a high enough income to max out my retirement accounts, put a lot towards my loans and even save some for this property. Its possible that with summer coming to an end this land will be available for a while (this type of land is not a hot commodity around here in the colder months), so I could save for a while and probably get better financing options. Its listed at $279k so even if I could haggle the price down it would still take me some time to save enough to pay for it all cash.
                        Click to expand...


                        You might also consider seller financing. Don't know if you don't ask!!

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                        • #13
                          With the land you're looking at, you may need to get a right of way on that. Road access and utilities are pretty important unless you're just using it for something that does not require those things like hunting or just a place to camp out. In terms of financing, another option would be to see if the seller is willing to owner finance. If you're having a hard time getting financing, other potential buyers may be experiencing the same as well. Good luck!

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                          • #14




                            Does anyone know if one can use a physician mortgage to buy land without immediate plans of developing it / building a home on it? Anyone have any personal experience with this?
                            Click to expand...


                            I don't have any experience with a land purchase with a physician loan, but I did purchase my home with a US Bank physician loan, and their introductory email says that they do offer "lot/construction financing" in their physician loan program.

                            I had a good experience with them in our home purchase.

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                            • #15
                              Ill get in touch with one of their lenders, but generally I believe to get a lot/construction loan you need to have the plans for your build already in place.

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