Things have changed dramatically in the last eight to ten months when it comes to acquiring a lot, especially in Maricopa County. Banks are pulling back nearly daily on loan to value guidelines, increasing reserve requirements and raising credit score minimums. The days of buying a lot sitting on it for a few years and selling for a nice profit is over. Lenders want buyers to invest deeply and someday, within two -three years, build a primary residence.
Minimum down-payment is now 25%, with some banks as step as 40%. This is due to declining values and the number of lot loans going bad. Nearly all banks are requiring five percent more down across the board on loans in Maricopa County. Banks are seeing more and more land coming back to them and are taking steps to insure future loans do not. Why are loans going bad? People overpaid and held on too long. They cannot sell the land without having to pay money to close a loan. Most people do not have money laying around to pay to SELL their property.
Full document loans still exist. Stated income still exist, however, I prefer to call them asset based stated income. If you are going state your income you better state a reasonable income and be ready to back that up with six months of your stated income in reserves, as well as, having your down-payment liquid.
Now the good news. There are many motivated sellers in the market. You can find good deals out there. Do your diligence and work with a Realtor that specializes in the area where you are looking and contact banks that are known for lending on land and inquire about lots they have available. I have seen lot purchases that are 25% less than what you would have paid six months ago.
It is a challenging market but with the right plan and with some resources you can still get a great piece of land.
Brad Brown
Construction Loan Specialists
Scottsdale & Paradise Valley
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 Ext 307- office
480-393-8801 - fax
bradbrown@communityfirstfinancial.com
http://www.communityfirstfinancial.com/
http://www.scottsdaleconstructionloans.com/
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