Posted on: 17th Jan, 2007 04:16 pm
If my land is paid for and I am building a new home on it, I understand I can use that land as collateral against the mortgage. What does this mean exactly? Is this considered as a "down payment" on the price of the mortgage? (i.e., if my mortgage were $150,000 and I used my land valued at $50,000; would my mortgage financed be only $100,000?)
What advantage is there to using your land to secure a mortgage loan if you have excellent credit?
Thanks
Shi
What advantage is there to using your land to secure a mortgage loan if you have excellent credit?
Thanks
Shi
Hi Shiann,
For getting a mortgage the house is generally kept as collateral, what this means is that if you stop making payment towards your mortgage in future, the lender would have legal authority to sell the house and recover the balance dues on the mortgage.
David
For getting a mortgage the house is generally kept as collateral, what this means is that if you stop making payment towards your mortgage in future, the lender would have legal authority to sell the house and recover the balance dues on the mortgage.
David
"What advantage is there to using your land to secure a mortgage loan if you have excellent credit?"
If you have excellent credit then lenders feel more secured providing you a loan and thus will offer better rates than they would if your credit is not good enough. In such situation lenders offer loans with higher interest rates to cover for the risk of lending money to a person from whom the risk of defaults is higher.
If you have excellent credit then lenders feel more secured providing you a loan and thus will offer better rates than they would if your credit is not good enough. In such situation lenders offer loans with higher interest rates to cover for the risk of lending money to a person from whom the risk of defaults is higher.
Welcome Shiann.
Using a land as collateral against the mortgage implies that the land is kept as security for the loan. If you are not able to pay off the loan, then the lender or the mortgage company will take over your property and sell it to retrieve their money.
The collateral isn't a down payment. The down payment is the money you pay upfront towards the home price and the remaining amount is being financed as the mortgage loan.
The amount you can borrow depends upon the completion value of the building estimated by an appraiser.
Using a land as collateral against the mortgage implies that the land is kept as security for the loan. If you are not able to pay off the loan, then the lender or the mortgage company will take over your property and sell it to retrieve their money.
The collateral isn't a down payment. The down payment is the money you pay upfront towards the home price and the remaining amount is being financed as the mortgage loan.
The amount you can borrow depends upon the completion value of the building estimated by an appraiser.
kindly give me advantages and disadvavtages of land as a collaterl
Hi harrison,
You can use the land as a collateral in order to get a mortgage. But, i won't be able to let you know about the disadvantages of a land loan. However, if you fail to pay the loan, you will lose the land.
Thanks
You can use the land as a collateral in order to get a mortgage. But, i won't be able to let you know about the disadvantages of a land loan. However, if you fail to pay the loan, you will lose the land.
Thanks