Could I get a home equity loan to buy an empty lot?
Sunday, December 18th, 2011 at
7:01 pm
We have some equity built up in our house. It is enough to buy 2 empty lots at a nearby lake. We want to buy the lot so we can have lake privileges and such. We may build on it in the future. Can we buy the lot with a home equity loan, or are there other options? The lots together are offered at a very low price.
We would only need to borrow about ,000. We have the rest. How much equity would I need to have built up to borrow that much?
Tagged with: home equity loan • nearby lake • privileges
Filed under: Fixed Home Equity Loan
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We took out a home equity line of credit to remodel our home. We were able to borrow $15,000 in all. Basically we went to the bank, got approved and they gave us a checkbook. We wrote checks whenever we needed to. They weren’t always for home repairs. We’ve written checks for auto repairs, insurance, etc. No one has ever questioned it or told us we could only write checks for repairs. If it was a business loan I’m sure it would be different (for tax purposes).
To give another example. When I was younger I wanted to attend cosmetology school. I couldn’t get a student loan because it wasn’t considered a "professional choice". My parents took out a home equity loan on their house to pay the school I attended the entire tutition. I paid it down and my parents let me use it again to write checks to pay for my wedding.
So all in all I would say that it’s a personal loan. You can choose how you spend it. It is backed by the equity you have in your home. So you are putting your home on the line. The bank has something to take if you mess up. I’m sure they don’t care if you use it to invest in land. It would be like writting a check out of your personal checking account to pay that $8,000. Then you owe the money to the bank after that.
Other options? Obviously take out another mortgage. If you can swing it some of the shorter term mortgages have really good rates. Or look into FHA loans. If they are available in the area the land is that might be a good option.
Yes, if you have enough equity you likely can get the HELOC and use the money for anything you like. Since it is only 8,000, you might also just do a credit card cash advance especially if they offer you one of those low interest deals for a year. If you can pay most of it off in a year you will have acess to some pretty cheap financing as most Helocs will have some fees and might even require an appraisal while the credit card advance will typically have 3-4% fees upfront.
No you can’t buy dirt
Depends on how much equity you have built up. Most lenders will not issue a HELOC/2nd that goes over 80% loan to value total (including original). You might find the odd lender that will go to 85%, but you will have to search to got to 90%.
Having said that, if you can get the HELOC/2nd, you can do anything you please with the money.