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What type of loan can I get for a property on 40.08 acres?

I have found a property that has (2) 20.04 acre parcels with it. The house is on one acre, but the other 39 acres are really unusable - basically the side of a mountain. I was told that because it's over 40 acres, it doesn't qualify for a normal FHA/ Conventional mortgage loan. What other type of loan could I get in order to buy this property? by mayve1_406_995 from Appleton, Wisconsin. Jan 4th 2013 Reply


Bert Carpenter (BertCarpenter)
#38 ranked lender in Arizona - 1,821 contributions

The answer really lies in how the property is valued. First of all, for a traditional loan, the loan is only going to be secured by the parcel that has the home on it. Secondly, the value of the home and the surrounding 5 acres is generally determines the maximum loan amount. The fact that the acreage is not useable does not factor into the maximum FHA loan amount. Most FHA appraisers who have experience in appraising large parcel properties will end up showing most of the value in the area surrounding the home if the rest is unusable, but I would guess that the sales price is including a value on that excess acreage. Work with a local Licensed Mortgage Professional who knows your area for the best guidance. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Jan 4th 2013
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,650 contributions

Your question is confusing.. Are there 3 lots... one acre with the home on it, and two 20.04 acre parcels?? If this is the case, then because it's over 40 acres does not disqualify you for an FHA loan, but because it's on separate parcels will... you can only purchase one lot/parcel with an FHA loan.. Unless the parcels were combined prior to your purchase contract.. But this shouldn't be a problem.. Just make an agreement that you will purchase the other two 20.04 acre parcels for cash upon successful closing of the first parcel with the home on it. If it's unusable, it's probably of little value, which means it probably won't cost you much.. If the value / sale price for the additional 40 acres is too high for you to pay cash, you can always do a separate land contract to purchase the parcels.. Your agent should get creative.. This is not a problem to put together, but it takes an experienced agent to work out the details.. if you're not using an agent, then shame on you... it's not really a smart idea to go about this type of transaction without the assistance of a educated, experienced professional... 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. 480-287-5714 WilliamAcres.com

Jan 4th 2013
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David Van Waldick (Dave Van Waldick)
#112 ranked lender in California - 11 contributions

An important home buyer buyer advantage is to speak to an experienced Loan Officer before you search for homes. If your LO is inaccessable buyers can pre-qualify themselves and notify their agents they are ready to going to our easy to use, proprietary, Home Buyer Instant Pre-approval web site at http://www.ePrequal.com. Get pre-approved in 5 minutes online including a an Automated Underwriting System with full credit and scores options. It's like having an experienced Loan Officer and underwriter at your fingertips 24/7. No waiting and No sales pressure. Go to ePrequal.com and get familiar with it and go make an offer.David Van WaldickCEO / FounderePrequal.com, LLCP: (888) 930-4223"One Minute Home Loan pre-Approvals" http:/www.ePrequal.com

Jan 4th 2013
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SEAN WRIGHT (LANDMARKMORT)
#6 ranked lender in Wisconsin - 47 contributions

There are lenders doing this type of financing, as long as the house value can carry the majority of the purcahse price. Call me if you need some assistance (920) 391-4234 or go online for an application (www.landmarkmort.com)

Jan 4th 2013
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Steven Ceceri (CreativeFinancingOptionsGroup)
#36 ranked lender in Massachusetts - 723 contributions

You have options with most all loan programs. The actual underwriting of the loan will only use up to 10 acres of the purchased property and the remaining acreage will have no additional value. The appraising issue will be in trying to find similar properties that have sold (ie. other properties with a single family dwelling and lot parcel of land). With FHA, you need to be concerned with your areas Loan Limits, so use the link here to look up your area: https://entp.hud.gov/idapp/html/hicostlook.cfm You need to make sure you are really interested in the house and the acreage as you are taxed on both! Feel free to let me know if you have any other questions by visiting my profile! Good Luck!

Jan 4th 2013
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Sorry for the confusion. The house is being sold with 40.08 acres. For some reason the acreage was divided into 2 parcels, but still being sold as 40.08 acres. I was told that anything over 40 acres would not qualify for an FHA loan and that I would have to be create. This is not a bank requirement - it is title requirement in the state of Montana. The normal security instrument used in lending is a deed of trust. If the property is over 40.00 a deed of trust can't be used.

Jan 4th 2013
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Steven Ceceri (CreativeFinancingOptionsGroup)
#36 ranked lender in Massachusetts - 723 contributions

So, your question now needs to be answered by a local Real Estate Attorney and/or Title Company that is very familiar with these issues. I am sure in Montana, the amount of acreage that is being sold with a single family home is more common there here on the East Coast. The financing situation can be figured out once you have this other issue more situated. Good Luck!

Jan 4th 2013
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SEAN WRIGHT (LANDMARKMORT)
#6 ranked lender in Wisconsin - 47 contributions

I only know Wisconsin.....not Montana?

Jan 4th 2013
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Bert Carpenter (BertCarpenter)
#38 ranked lender in Arizona - 1,821 contributions

It doesn't matter HOW it is being sold, FHA, Fannie, Freddie and VA will ONLY accept one parcel as collateral for one loan. What you have is one parcel at 20.04 acres with one house (eligible for any of the above types of loans) and one 20.04 acre parcel of raw land that is adjacent to the first, which is NOT eligible for any of the above types of loans, and will not be contribute any value to the loan transaction for the parcel with the house. The same would be true if you were buying two tract homes next to each other. One lot, one loan. Two lots, two loans. One lot with house and one vacant lot next door = One loan on the lot with the home and the vacant lot won't be used as collateral for the home loan and any value it has will NOT count toward your equity in the transaction. Only the lot with the home counts. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Jan 4th 2013
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Andrew Alfonso (CashCow)
#44 ranked lender in Florida - 271 contributions

This is a complex scenario in which all lenders will carefully come up with there own measurement of risk. Most likely - You wont get much. Just being honest. I own half a mountain in Tenn and trust me -- The banks just basically loan money to the people that really dont need it. You need a portfolio or private equity firm. Andrew - www.andrewalfonso.com

Jan 4th 2013
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