When you’re buying land in Texas, it can feel like there are many things you need to check on and make sure you have. That can often diminish the joy and fun of having achieved a dream of owning land and making it yours!
We’ve helped hundreds of people achieve their dream of land ownership and while each case is different, we have seen that financing is the biggest obstacle that can slow down and complicate the land buying process.
Here are 4 things you can do before hand to make that process as smooth as possible so you can get your land even faster!
1. Get Pre-approved – Surprisingly, fewer than 10% of people get pre-approved for a mortgage of any kind, much less a loan to buy land and build on it. Having a pre-approval letter can help you in many ways! First, it gives you an idea of what your budget is and how much you’ll be able to afford. There is nothing worse than falling in love with a piece of property only to find out that you can’t afford to purchase it. Second, it gives you a better position with competing offers! If you have an approval letter and a competing offer doesn’t, your offer looks much more appealing because the owner of the land can confidently move forward with you and do it quickly!
2. Avoid Big Purchases – If you’ve done any research into loan or mortgage approval, you’ve probably seen this advice because it is true! There have been many times that purchases have stalled or fallen apart because the potential buyers went on a spending spree right before they closed on a property! Don’t be one of those potential buyers! Have a little patience and wait to start buying those big ticket items until after you’ve closed on your property!
3. Have your Paperwork in Order – Not having your paperwork in order is another point that slows down the financing process and makes it more complicated than needed. Generally, banks or mortgage lenders will ask for your two most recent paystubs, last two months of bank statements, and last two years of tax returns. If you forget, just remember the Rule of 2: 2 Paystubs, 2 months of bank statements, and 2 years of tax returns. If you have a large deposit to your account during the 2 months of bank statements, be sure you can explain where that money came from as that will pause your financing process. Again, most of your financing problems will be smoothed over if you just remember the Rule of 2. One thing you need to be aware of is that if your search takes longer than 2 months, you’ll need to send updated documents to your lender but it will be the same Rule of 2.
In addition to your financial paperwork, you’ll want to make sure you have copies of the survey, boundaries, and zoning specifications. These are all things the seller should have. If you’re working with a land expert, they’ll be able to ensure that you have those needed documents.
4. Pick the Right Lender – It can be easy to think that you can just call up a Chase Bank or Wells Fargo to get a land loan but that is not the case. Many times, your best option for getting a land loan is from a local bank in the area or a credit union. They are often more flexible in their criteria and they will want to work with you. Local banks are also a great partner because they have local knowledge and give you information that would be difficult to find elsewhere. We have worked with lenders all across the state and would be happy to help you find the best lender for you!
There you have it! Again, every purchase is unique but if you have these 4 things taken care of, your financing process can be very smooth and turn your headache into a dream come true! Check out this page to see other tips to make your financing process easier!