Forgotten Your Password?

Need to Register?

Question Icon

Can additonal land go toward equity?

I have a home that sits on 8 acres of land. After a few years I acquired an additional 41 acres of land. The 41 acres of land is connected to my original 8 acres. If the land is consolidated into one parcel of land can I use the additional land as equity for a home loan? by tgramsey04741 from Birmingham, Alabama. Sep 28th 2015 Reply


As long as an appraiser can find like comparables with the same amount of land in the area for the appraisal

Sep 28th 2015
2
0
William J Acres (William_Acres)
#1 ranked lender in Arizona - 7,802 contributions

Yes and No.. it wont add any value by consolidating.. in other words, if the home is worth $100K, and the 41 acres is worth $100K, then whether they are attached or not, the combined value will still be about $200K.. however, if most homes in your area are on 8 acre parcels and not 40 to 50 acre parcels.. then when you go to sell your consolidated parcel, the appraiser might not be able to consider all of it's value.. which could result in you getting less.. Also, but consolidating, it's possible your property taxes could increase.. But to answer your question, if you consolidate for lending purposes, then the appraiser has a guideline he must adhere to... the land cannot represent more than 25% of the homes value.. and he has to have other 50 Acre sold comparable properties in your neighborhood to do a full comparative evaluation of value.. It's best to contact a local appraiser and ask him which way would be best for your area.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Sep 28th 2015
2
0

I'm actually in a farm community where most of the people around me have 40+ acres of land attached to their house. The house just up the road from me had 80 acres of land attached to it when it sold last month. Thanks for the advice. I happen to know a local appraiser who can probably answer my question.

Sep 28th 2015
1
0
Larry Gray (lgray_312_247)
#562 ranked lender in California - 1,127 contributions

Often when consolidating with a lot of land you might have to look into an entirely different kind of loan then most of what we residential lenders do...perhaps an agricultural loan. Otherwise, William Acres gave a good answer.

Sep 28th 2015
0
0
Chuck Young (ChuckY)
#18 ranked lender in Alabama - 12 contributions

I agree with Mr Acres in principle. The short answer is yes/no. It must be contiguous at least in Alabama and the max is 25 acres total without question for a govt loan. So the 25 % rule also applies. USDA might be the solution but I dont have the guides for excess acreage handy for that. Unless the property is improved in some way such as a guest house. Good question. Try going to Farm (Ag) Credit in your State to find out what your options are if you really need all that equity.

Sep 28th 2015
0
0
Todd Tholl (toddtholl@leader1.com)
#4 ranked lender in Iowa - 237 contributions

all good answers here

Sep 29th 2015
0
0
Subscribe to our news feed.