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  1. #1
    drewkobi is offline Junior Member
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    add adjacent vacant land to existing home

    I live in Florida and We are seeking financing to purchase land adjacent to our house 2 residential vacant acres. We are seeking what appears to be a unique loan, although I imagine people buy land to expand their existing property all the time. It seems we are going to have to get 2 loans? A cash out refi and a land loan. The land/lot loans we are encountering are 3/1 & 5/1 arms until construction but we never plan to build on the land. We are having trouble finding a lender who can do both loans the refi of the existing home to get cash out for 25% down on the land. We do not want to have to pay 2 complete separate sets of closing costs which we will if we use 2 different lenders. Do you have any suggestions on how we can get this done? On top of that the seller is about to have a lein put against the property due to unpaid medical bills. He is in a hurry to sell it before that happens. He also is willing to negotiate on price because he requested cash under the table (hide from creditors). So instead of paying 250,000 for the land, we'll pay 200,000 and give him $50,000 on the side. Is this legal? If we do this should we have some legal documents drawn up? We were thinking of asking him if we can have the lot put in our name before we purchase it, have it rezoned as 1 lot, and that would make it easier to get financing with just one loan instead of 2. Is something like that legal and could a contract be drawn up to keep things legitimate?THANKS!
  2. #2
    CraigFL is offline Member
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    One way to do it would be to have the present owner finance your land deal -- contact for deed. The closing costs would be minimal.

    It is unlikely that you could give him cash "under the table" with a conventional loan because you would be signing documents that would disclose all the monies disbursed.
  3. #3
    seniorjudge is offline Senior Member
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    Stay away from ARMs.
    There are two rules for success:

    (1) Never tell everything you know.
  4. #4
    Ozark_Sophist is offline Senior Member
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    Mrs OS and I recently added additional land to our property. We has 80% equity in our house, so we just refinanced the original mortgage and included old and new property under a single loan. Achieved a lower rate in the process. Our house had to be reappraised with the value of the vacant land considered as part of that appraisal (for example, value of house on 3 acre lot instead of 1).
  5. #5
    jpathfynder is offline Member
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    Here's my 2 cents:

    1) ARM's are evil, there's no reason on earth you'd have to accept one in todays market. Shop around. I just refinanced my home at 5 1/4% 30 year loan. You are aware of the mortgage/forclosure disaster going on today... ARM's are a significant contributer.

    2) Closing costs... My refinance cost me $250 + $275 for an appraisal. And that's only because my SEV was way off. They were willing to loan me 90% of my SEV without an appraisal. Once again shop around. The mortgage broker in the office next to mine was going to charge me 2k in closing costs + the appraisal.

    3) Using 2 different lenders - this is actually a good move in todays market. Have you ever read a mortgage document from cover-to-cover. It's basically a list of 101 ways the lender can take your property and kick you to the street. You'll notice a mortgage doc doesn't have a single sentence in it protecting any of your rights, ok.. well maybe one.

    4) If you ever run into financial difficulties and need to sell the lots and they are financed with your house under the same mortgage, permission will be granted at the sole discretion of the lender. ie: they can say no, unless you pay off the full mortgage balance.

    5) Cross collaterialization - If both your loans are at the same bank, default on one loan and you've defaulted on both. Miss a couple payments on the land, and kiss your house good bye.

    6) As far as giving him $50,000 under the table, well... how about giving him $50,000 above the table? This is done all the time, and is perfectly legal to the best of my knowledge. Better yet how about giving him less? It sounds like you have some serious negotiating power here. He obviously owes $200,000 or less, and is in trouble. It is a buyer's market after all
  6. #6
    las365 is offline Senior Member
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    He also is willing to negotiate on price because he requested cash under the table (hide from creditors). So instead of paying 250,000 for the land, we'll pay 200,000 and give him $50,000 on the side. Is this legal?
    None of the other responders seem to have been concerned about this, and I assume they know more than I do, but... I would be wary of doing anything that might eventually lead to being accused of assisting him in defrauding his creditors. But that's just me.
  7. #7
    justalayman is offline Senior Member
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    first,

    On top of that the seller is about to have a lein put against the property due to unpaid medical bills. He is in a hurry to sell it before that happens.
    I would suspect there already is a lis pendens in place which would allow the lein to be placed even after the transfer. You really want to be sure of this before signing squat.

    Now, as to borrowing money;

    first, why borrow. Just pay cash.

    just trying to be funny there.



    You can do several things;

    a blanket mortgage would be the most appropriate. You state you are not considering building but this would still allow you teo re-seperate the properties (financially) should you do so and need to sell each part seperately , without a big issue.

    or; you can simply refi your home and include the additional parcels inthe mortgage as a total single unit. You can do this without combining the parcels (in regards to gov't acknowledged parcels)

    in either case I do not understand why you are looking at two loans. If you have the equity available for the cash needed to make this go, that can simply be taken care of at the closing table when your 1 new mortgage is placed to cover all 3 parcels and the cash to the seller is written via check to him.

    1 big transaction.

    and nobody has touched the $50k under the table because it is not a good idea and could be illegal depending on how you do it. You have a very good chance of being scammed out of the $50k if this falls apart. Come to think about it, this whole thing sounds like it could be a scam.

    Have you checked the actual record of deeds and the title to be sure this guy even owns the property, ALL of the property?
  8. #8
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    [QUOTE=drewkobi;1870802]I live in Florida and We are seeking financing to purchase land adjacent to our house 2 residential vacant acres. We are seeking what appears to be a unique loan, although I imagine people buy land to expand their existing property all the time.
    However...they NEVER parcel IN but only parcel OUT, meaning they do not combine the lots into ONE parcel number nor do they NEED to at all. An appraiser can combine 3 parcel # as well as the title policy can tie all up into ONE policy thus the lender will tie all op into ONE loan
    It seems we are going to have to get 2 loans? A cash out refi
    One loan from your res. to put down on the land loan, Yes
    and a land loan.
    that you will need 50% d.p. not 25% d.p.
    The land/lot loans we are encountering are 3/1 & 5/1 arms until construction but we never plan to build on the land.
    Then you ARE NOT getting a "construction" loan. Construction loans are to build and you must have plans, blueprints, a builder and ALL start up permits and zoning acquired FIRST. They will pay as you go (the title co. or the lender disburses funds as the sections get completed through escrow). You WILL not get a "construction" loan until all of this is done first.
    We are having trouble finding a lender who can do both loans
    and you won't either, no one likes just land loans. This is not a standard real estate loan. You are looking in the wrong place for a lender, further you are looking at finance co. rates of 175 and they want to see 50% down
    the refi of the existing home to get cash out for 25% down on the land.
    o.k. and where are you going to get the rest of it?
    We do not want to have to pay 2 complete separate sets of closing costs
    too bad, you may have to because you are talking 2 entirely different loan types...UNLESS OF COURSE if you want some place like Beneficial or CitiFinancial to do one BIG loan at 17% LOL
    which we will if we use 2 different lenders.
    then combine 3 parcels #'s into the title work. (after you acquire them) but then you can't get the loan on the residence, NEVER COMBINE the parcels into ONE parcel in doing THIS you are working backwards. People pay dearly to parcel OUT, not IN. This depletes the value
    Do you have any suggestions on how we can get this done?
    I just told you how
    On top of that the seller is about to have a lein put against the property due to unpaid medical bills. He is in a hurry to sell it before that happens.
    I BET he is!!! Doesn't work like that. The title co. WILL be looking for unpaid J.L.'s prior to close...many people make this mistake and get ALL the work done and they POP up. J.L.'s on the seller will be verified. J.L.'s are Judgement liens, this is part of what title insuance is for to make sure there is no clouding coming up
    He also is willing to negotiate on price because he requested cash under the table (hide from creditors).
    AHHHHAHHHAHHH LOL, I bet he has!!!
    So instead of paying 250,000 for the land, we'll pay 200,000 and give him $50,000 on the side.
    You are a FOOL to even consider this, further, this property IS already clouded, tainted and I wouldn't touch it with a 10 ft. pole. Do NOT give him one red cent ON THE SIDE...Indeed
    Is this legal?
    No, it is not
    If we do this should we have some legal documents drawn up?
    yes...a SINGLE P.P. (purchase price), no hidden down paymts. or you are only screwing yourself. The lender will want to see a d.p. (down paymt.) and you cannot say you paid it "in cash"
    We were thinking of asking him if we can have the lot put in our name before we purchase it,
    then YOU WILL acquire a clouded title with his debt as soon as it is picked up because no title insurance for J.L.'s and things were noted and satisfied, quit trying to deceive the system, it will come back and bite you
    have it rezoned as 1 lot,
    I already SAID this is stupid because owning 3 parcels is fine and on one title commitment for the lender the appraiser too with instruction can tie all 3 into the value as long as they are all adjacent with one another or side by side. ONE big parcel depletes the value
    and that would make it easier to get financing with just one loan instead of 2.
    Arrrrgh...you can't do this because you don't own them yet, you can count it as ONE property with 3 parcel numbers after you acquire them
    Is something like that legal and could a contract be drawn up to keep things legitimate?
    don't buy this property in ANY capacity, it WILL be clouded by CURRENT J.L.'s against the seller.
    THANKS

    You are welcome.
  9. #9
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    Quote Originally Posted by Ozark_Sophist View Post
    Mrs OS and I recently added additional land to our property. We has 80% equity in our house, so we just refinanced the original mortgage and included old and new property under a single loan. Achieved a lower rate in the process. Our house had to be reappraised with the value of the vacant land considered as part of that appraisal (for example, value of house on 3 acre lot instead of 1).
    Did you have to combine the 2 parcel #'s into #1 parcel #? This would have taken a complete re-surveying, stakes and everything to do. You should not have had to do this at all. Later down the road, you may want to sell that parcel and or build on it, a separate residence. However you would have to pay down the mtg. for the percentage the appraiser gave to that portion of the land value to get them to release it VS. doing a complete refi. This can be approved by the lender at time of the buyers approval and all be done at one closing so no out of pocket to do this from you. (so remember this)
    Also that appraisal merely included both parcel numbers correct?
  10. #10
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    [QUOTE=jpathfynder;1873105]Here's my 2 cents:

    1) ARM's are evil, there's no reason on earth you'd have to accept one in todays market. Shop around. I just refinanced my home at 5 1/4% 30 year loan. You are aware of the mortgage/forclosure disaster going on today... ARM's are a significant contributer.
    5.25% 30 yr. fixed? What month? No points to buy this down? What month?
    2) Closing costs... My refinance cost me $250 + $275 for an appraisal.
    title insurance ALONE is more than $250 as well as many OTHER fees mandated such as lien search, escrows, underwriting to the lender, and many others, scan and show me your HUD 1 settement statement with your name and address etc...blacked out because I am calling you on it
    And that's only because my SEV was way off. They were willing to loan me 90% of my SEV without an appraisal. Once again shop around. The mortgage broker in the office next to mine was going to charge me 2k in closing costs + the appraisal.

    3) Using 2 different lenders - this is actually a good move in todays market.
    you think so...do you KNOW WHO is lending on vacant lots today with NO site of construction going on? Finance cos. at 17%
    Have you ever read a mortgage document from cover-to-cover. It's basically a list of 101 ways the lender can take your property and kick you to the street. You'll notice a mortgage doc doesn't have a single sentence in it protecting any of your rights, ok.. well maybe one.
    I'll give you that one
    4) If you ever run into financial difficulties and need to sell the lots and they are financed with your house under the same mortgage, permission will be granted at the sole discretion of the lender.
    bull pucky, they will want you to pay down the pinciple and it be adjusted to the appraisers lot value for that portion etc...and then they MIGHT let you
    ie: they can say no, unless you pay off the full mortgage balance.

    5) Cross collaterialization - If both your loans are at the same bank, default on one loan and you've defaulted on both.
    He is NOT getting 2 loans at the same lender. UNLESS he wants his residence with some finance co. willing to do land loans at 17% AND 50% down, he has NO prospect of building on it yet
    Miss a couple payments on the land, and kiss your house good bye.
    come on...PLEASE tell me you aren't some rookie broker. If you are stay away from my bank.
    6) As far as giving him $50,000 under the table, well... how about giving him $50,000 above the table? This is done all the time, and is perfectly legal to the best of my knowledge. Better yet how about giving him less? It sounds like you have some serious negotiating power here.
    He sure does, when a seller is this motivated he is in serious trouble thus so is his property and THIS ONE is...if it walks like a duck??
    He obviously owes $200,000 or less, and is in trouble.
    Ya' THINK???
    It is a buyer's market after all
  11. #11
    jpathfynder is offline Member
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    2) Closing costs... My refinance cost me $250 + $275 for an appraisal.
    Quote Originally Posted by Grandma's house View Post
    title insurance ALONE is more than $250 as well as many OTHER fees mandated such as lien search, escrows, underwriting to the lender, and many others, scan and show me your HUD 1 settement statement with your name and address etc...blacked out because I am calling you on it
    Here it is:

    http://allyoucanupload.webshots.com/...54072090875753

    The title search was free - no charge

    This was a refinance as I stated - no need for a new title insurance policy, I already have one.

    No escrow stuff in Michigan, you're thinking of states like CA.

    I elected to pay off my taxes out of proceedes - the $1,166.09. I could have handled this prior to closing, I was given the option.

    and I payed of my car as well - the $14,909.95 disbursement

    Total settlement charges $250 bucks + the $275 for the appraisal.


    My house appraised at 230k, the mortgage payoff was the $79,868.79 I refinanced at $99,250.00.

    Call someone else out next time...
  12. #12
    nextwife is offline Senior Member
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    Quote Originally Posted by jpathfynder View Post
    Here's my 2 cents:

    1) ARM's are evil, there's no reason on earth you'd have to accept one in todays market. Shop around. I just refinanced my home at 5 1/4% 30 year loan. You are aware of the mortgage/forclosure disaster going on today... ARM's are a significant contributer.
    Ok, look, ARMS, themselves are a legitimate mortgage instrument, and used, properly and responsibly NOT "EVIL". I've had a non-volatile, portfolio ARM for 10 years. It can't change more than 1% a year or 3% lifetime.

    The RESPONSIBLE use of an ARM requires that one budget and plan spending based upon the arm's and household's WORST case scenario, rather than best, and to moderate other spending. Our ARM allowed us to pay off MORE principal (we pay on a self-imposed accelerated amortization) than we would have otherwise, and to have our loan automatically drop it's interest rate three times while never incurring the cost or trouble of refinancing.
  13. #13
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    Quote Originally Posted by nextwife View Post
    Ok, look, ARMS, themselves are a legitimate mortgage instrument, and used, properly and responsibly NOT "EVIL". I've had a non-volatile, portfolio ARM for 10 years. It can't change more than 1% a year or 3% lifetime.

    The RESPONSIBLE use of an ARM requires that one budget and plan spending based upon the arm's and household's WORST case scenario, rather than best, and to moderate other spending. Our ARM allowed us to pay off MORE principal (we pay on a self-imposed accelerated amortization) than we would have otherwise, and to have our loan automatically drop it's interest rate three times while never incurring the cost or trouble of refinancing.
    Yes...the RESPONSIBLE use of an A.R.M. is fine! Obviously you are one of the few that understands it and are responsible about it. A 1% cap per yr. is GREAT too. Typically only F.H.A. has this (a 1% annual cap).
    The a.r.m. problems of today are not your RESPONSIBLE type nor the F.H.A. a.r.m.s it is the 2 yr. and the 3 yr. fixed with a 6% cap that CAN actually go up the entire 6% when they do adjust.
  14. #14
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    Quote Originally Posted by jpathfynder View Post
    2) Closing costs... My refinance cost me $250 + $275 for an appraisal.


    Here it is:

    http://allyoucanupload.webshots.com/...54072090875753

    The title search was free - no charge

    This was a refinance as I stated - no need for a new title insurance policy, I already have one.

    No escrow stuff in Michigan, you're thinking of states like CA.

    I elected to pay off my taxes out of proceedes - the $1,166.09. I could have handled this prior to closing, I was given the option.

    and I payed of my car as well - the $14,909.95 disbursement

    Total settlement charges $250 bucks + the $275 for the appraisal.


    My house appraised at 230k, the mortgage payoff was the $79,868.79 I refinanced at $99,250.00.

    Call someone else out next time...
    Dude...now show me the portion of the mortgage that says a 5.25% 30 yr. "fixed" and I will start seasoning the next crow I see for dinner! lol

    We do loans in Michigan...I will be calling our title co. in the A.M.
    We too can offer a no c.c. loan by jacking UP the rate to be a lender paid c.c. deal. The c.c.'s will show on the H.U.D. and we will show a lender credit for them. That rate is 5.875% and must cover all c.c.'s with a 1.6% margin. So if our loan amt. is below 120k it won't work.

    The only mistake I think you made was paying off that car of 14k. While it may feel GOOD now...lower payment and all...that car will be LONG gone within 30 yrs. and you will still be
    paying on it. In fact the avg. car is kept 5 yrs. you will be thru 5 more cars and still be paying on this one. However with the deal you just got on your mtg....WHO CARES.

    Good Job.
  15. #15
    jpathfynder is offline Member
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    Quote Originally Posted by nextwife View Post
    The RESPONSIBLE use of an ARM requires that one budget and plan spending based upon the arm's and household's WORST case scenario, rather than best,
    Amen! Words to live by.

    Unfortunately most people don't think about (or prepare for) what may happen (worst case scenario) 5 or 10 years down the road. As our current economy and mortgage forclosure rates are showing us.

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