I have enough saved up to pay my vacant property note. Interest rate is 6% and I owe about $50k. I have been saving up to build a house but I guess I could always borrow against the land right? I should still have almost $30k left over but always heard you should have 20%.

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Posted by Siderophore

Member since Nov 2010

3338 posts

Posted on 3/29/13 at 10:21 pm to vettegc

Why are you looking to pay it off when you are planning to open a new loan against the land because you spent the money used to pay it off?

This post was edited on 3/29/13 at 10:22 pm

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Posted by vettegc

Livingston

Member since Dec 2006

495 posts

Posted on 3/29/13 at 10:40 pm to Siderophore

Land loans have higher interest rates. Mine is 6%. I think the new loan would have a much lower interest rate.

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Posted by ItNeverRains

37069

Member since Oct 2007

25385 posts

Posted on 3/30/13 at 9:43 am to vettegc

If you Take out construction loan, should be around 4.5%, bank will pay off land with first draw.

Assuming you didnt buy 500 acres

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Posted by Max Guru

Member since Sep 2012

531 posts

Posted on 3/30/13 at 1:00 pm to ItNeverRains

No. If affordable, take your savings and buy a CD. Put the CD up against a bank loan. (any bank will loan you money against secured cash, and you can get the lowest int rates against cash if you shop around). Pay the bank loan off and still have your intial savings/CD, plus the interest you make.

This post was edited on 3/30/13 at 1:02 pm

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Posted by vettegc

Livingston

Member since Dec 2006

495 posts

Posted on 3/31/13 at 4:07 pm to ItNeverRains

So your saying it basically works out to be a wash?

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