Many people prefer to buy developed lots and build on them rather than buy lots with existing homes in order to cut back on costs. Tampa, located on the West coast of Florida, attracts new residents to the area with its warm weather and proximity to the beach. Many people buy developed lots in Tampa with cash, but lenders offer lot loans and construction-to-permanent loans which pay for the lot and the building of a home.
Instructions
1. Contact lenders with a presence in Tampa. Most financial institutions only offer financing for properties within the same area as branch locations. Major banks such as Bank of America, Wachovia and Suntrust all have offices in Tampa. Ask about the terms available for lot loans and if you intend to build a house; also ask about construction-to-permanent loans. Generally, down payments for lot loans are at least 30 percent while some banks allow down payments as low as 5 percent for construction-to-permanent loans.
2. Choose the lender with the best rate and terms and submit an application by providing your name, social security number, ID and last last two years of tax returns. Ask the lender to provide you with a pre-approval letter stating the maximum dollar amount that you can borrow.
3. Go online to search for developed lots for sale in Tampa. You can use Zillow.com or the website of the Greater Tampa Association of Realtors, Gtar.org to find land for sale. You can also search for local realtor listings and builders, as some construction companies sell pre-construction developed lots. Enlist the services of a licensed Florida realtor to make a bid. Your realtor and the realtor representing the seller will draw up a contract for you and the seller to sign. Sign the contract and keep a copy of it.
4. Give your contract to your lender and ask the loan officer to proceed with your lot loan. The lender arranges the land appraisal, but you must pay for it; normally, lot appraisals costs at least $400. Agree on a closing date, sign the mortgage documents and take possession of the land.
Tips Warnings
Many insurance companies refuse to write insurance in Florida due to the risk of hurricane damage. The companies that do insure Florida homes usually charge much higher premiums for homes in coastal areas such as Tampa. Additionally, if you buy land with a loan, you must buy flood insurance if your land falls within a flood zone.
Most lenders refuse to lend money against semi-constructed properties. Some people begin to build homes with cash reserves but costs exceed their budget and they cannot qualify for financing from banks. If you plan to build a home on the lot, ensure you have sufficient reserves to cover all eventualities or apply for a construction-permanent loan.
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