Question about buying land
 

do any of you know about mortgages for buying hunting property when already have a primary home and mortgage. what are the interest rates like and length of loans and down pymt required? is there any tax write off there? if you own land like this, what type of insurance do you carry for it? tx!

RE: Question about buying land
 

I don't know about loans, but I sell insurance and you can cover the new land with a liability extension from your current homeowners policy or buy a seperate a umbrella policy for higher liability limits . Neither cost very much.

RE: Question about buying land
 

I went through your situation. The interest rates are higher on land loans due to their speculative market value, and typically, you have to take out a loan with a bank that is in the general area of the land. Also, they generally don't want to give you a fixed rate, and their floaters always seem to be higher than they should based on movements in like-maturity treasuries. For instance, mine was amortized over 20 years, but reset every two years based on interest rate changes. 2 year treasuries went down 8/10 of a percent, and they jacked UP my rate after two years by a full percent. They would have even gone up higher but promised me a 1% cap. They got away with it because their rate is whatever they want it to be, and they are out to make money on you. They wouldn't tie it to a benchmark security that they could be held to. When my house value increased quite a bit, I took out a second mortgage on my primary residence and paid off the land loan. The rate was higher than my first mortgage, but lower than the land loan. End result: I got a lower rate, fixed rate, and knocked off about two years off the life of the loan, all at the same time. Yes, you can write off a land loan if you have a dwelling there (even a trailer). If you roll it into a second as I have done, obviously you can write that off too.

RE: Question about buying land
 

Depending on how much equity you have in your current home...taking a 2nd out to pay for the land might be your best bet as far as interest rates go. Our local banks that deal with farmers and rural land loans generally have the rates set about 1.5% higher (fixed) for land only loans. They also require 20% down and give you a max of 20 yr term. This seems to be somewhat of a standard, at least around our area for this type of loan. When we bought our first peice of property, thats what we did. Also we did not put any insurance on it, since it was land only. Just posted the entire thing very well and that was it. Never had any problems.

RE: Question about buying land
 

Lots of different considerations...I would talk to Farm Credit to start. They have excellent rates and they have a feel for the market on rural property. There is a general misconception that they just do farm loans. Not right...they will do homes that are anywhere not just farms. I have my home and a farm with FCA and they had much better programs than a bank can do...talk to them about their cash deposit programs.

As far as the tax question, there are some good breaks if you are "actively" engaged in the farming enterprise. That means you have to Own cows vs renting pasture out and being a passive partcipant. Get with a good accountant first...dont get tax info on a forum!!

Insurance is not a big issue, most insurance companies have policies designed for what you are talking about.

Central Illinois farmland has shot through the roof in last 12 months...where are you looking to buy?

RE: Question about buying land
 

You can check with Farm Credit, but don't stop there. I was helping a client arrange financing on a small tract (58 acres @ $1500 per acre) a couple of weeks ago and the first place we checked was Farm Credit. They wanted close to 10.5% on a loan.

RE: Question about buying land
 

thanks for the info guys. i am looking in michigan at a 40 acre tract.

RE: Question about buying land
 

I'm with WV. I think after all is said and done, hopefully you have the equity to go that route....I've only owned my house for a year so I'm still waiting to build but my folks went that route on some land that they turned over for a huge profit.

RE: Question about buying land
 

i would love to own my own land but my currnet mortgage on my home is around $3000 a month. maybee if i ever hit the lottery.....

RE: Question about buying land
 

I have mine at 5.3% with FC...30 years fixed...and I can deposit any cash into a interest bearing account up to the balance of the loan, and it pays the same rate as the loan is...