Community Home Loans

Land & Lot Loans

Land and lot loans are promissory notes secured by trust deeds on fee simple interests in bare, vacant or what some people refer to as unimproved property. These loans are considered real estate loans and generally the same principles that govern regular real estate lending apply to land and lot loans.

As in most real estate loans an escrow is needed, title insurance will
have to be issued and of course a property evaluation or appraisal will have to be made. The main distinguishing feature of the unimproved property loan or land and lot loan is the fact that the property is not being productively used by the prospective borrower / owner.

As a result of this property idleness or disuse a borrower may grow weary of making payments on a loan. Consequently, default rates are higher, foreclosures more common. To protect their interests, lenders are conservative on how much they will lend on unimproved property. They not only decrease the appraised value of the land or lot but decrease the amount they will lend. Many lenders, in fact will not lend on unimproved land or vacant lots. A prospective borrower may have to search for a lender and find rates higher compared to other types of real estate loans.