Maine is a rural, less populated state and land is in big supply, under valued and low cost to buy.
But bank loans for Maine land mortgages require larger down payments. In the thirty five to forty percent down payment range unless there is a structure, improvements on the property.
Something substantial enough for a dwelling so the Maine bank can find another lower down payment required loan program to slide the land loan in to change the terms.
Maine land loans through a banking, lending institution also come with higher interest rates than standard garden variety home mortgages. Why?
Because banks like to make loans that are packaged to sell on the secondary mortgage market. That's how the borrower, consumer gets the lowest home loan bank rate.
But with land, because the mortgage is not sold, but retained, the Maine bank is going to make it worth their while to "hang on to the loan". Usually fifteen year term land only mortgages are tops for the pay back term.
The beauty of a Maine land property sale is the owner usually does not need to sell outright to replace it.
With a Maine home that has a mortgage it is imperative that the property be cashed out, paid off, discharged. The loan payed off at the Maine real estate closing. So another house can be purchased. It can be replaced by the relocating, moving Maine home owner.
Maine land that a woodpecker would have to pack a lunch to fly across, heavily cut over is less risky to owner finance.
Cheap, cut over Maine wood land owner financing is common because the buyer can not hurt it. Less down payment is required because the risk is lower. And if the owner financed land buyer drills a water well, installs a private septic system, does site work for a home, it makes the collateral, the property mortgaged that much more valuable for the owner on the other end of the mortgage loan.
Banks in Maine, anywhere don't want the owner to be setting up "wrap arounds". A contract between a buyer and seller of a home sale. Where the buyer "piggy backs" on the existing Maine home mortgage. A bell goes off once that is attempted by the seller. To finance a home with the private mortgage terms weaved around the existing loan instrument on record at the local registry of deeds causes an acceleration clause to comes alive. The money owed, remaining loan balance all becomes due. Like a television thriller where the home made bomb explodes because the bomb squad should have cut the green not red wire.
If the Maine home is owned outright, has no existing mortgage loan on it, owner financing could be an option by the seller. But paying off an eighty thousand dollar loan from a home sale is a longer mortgage amortization schedule than a simple Maine recreational land loan. That is something in the easy to carry loan range of fifteen to twenty thousand dollar for a Maine land purchase. The small recreational Maine land properties are under five years to pay off and the stakes are not as great as the more expensive, longer drawn out larger home loan.
It's why they invented banks.
To provide fifteen, twenty, thirty year loans to provide a sensible, manageable Maine home mortgage.
So the owner of the Maine home can juggle other priorities like heating it, keeping it repaired and maintained, insured, the property taxes paid.
And other luxuries of life like groceries, kid's braces, saving for college. And paying the light bill, making car payments.
The other pit fall to owner financing a Maine home, or larger loan on real estate than a small recreational land sale creates for risk involves credit.
The ability of the buyer of the Maine home or any other type of real estate to actually be able to get a bank mortgage loan. If a bank may not want to touch the borrower, buyer with a ten foot pole. Because of poor credit history, a low fico score or a situation of just too much, too high debt rations.
If the real estate land, home, whatever buyer, borrower has nose bleed section high bills, installment debt or delinquencies that he is struggling with, you the seller should think twice about ponying up, entering in to a private owner financed mortgage loan arrangement. And the general rule is "the higher the price of the real estate, property, the thinner the buyers". Risk increases with the size of the price tag.
Owner financing Maine land when the property is a small recreational listing that it low priced. Those are ideal arrangements with the market place serving itself.
Video on Maine owner financing land.
Sometimes small land seller financed deals make a nice annuity for the owner and are too small for a big bank to get involved with.
Because the closing costs are close to a third, half or more of the total price for that Maine land parcel.
Standard down payment and the rate, terms for the Maine land that is owner financed starts with the buyer. Because no matter what the seller, owner of the Maine land spits out like a CPA for this much down, this payment a month for this interest rate, if it does not fit the buyer's budget, danger ahead.
Foreclosure after struggling with payments that get behind on the Maine land owner financing loan is good for lawyers. Not so much fun for the seller who has to initiate that Maine land mortgage foreclosure. Maine land, load up, you always get a lot for a little. More often than not with attractive, generous Maine land owner, seller carried financing rates.
I'm Maine REALTOR Andrew Mooers
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