Refinancing a Land Loan
When refinancing a land loan a person dislikes the costs associated with refinancing and this can cause a person to pause when thinking about refinancing. This is not always the case and so it is important to understand the ins and outs of refinancing a land loan.
“Most people who’ve had a house loan or residential mortgage loan are familiar with the substantial costs to refinance their loan when rates go down. That’s because, in most cases, when you refinance a residential mortgage loan, you have to get new title work done, a new mortgage, a new appraisal, sometimes new surveys, so you can be talking thousands of dollars in fees,” says Brandon Simpson of First South Farm Credit.
Many do not know that there are other options when it comes to refinancing. If you find a lender such as First South or Farm Credit System who will not only make the loans but service them as well, you can save. Since these mortgages will not be resold into the secondary mortgage market, you can benefit from the lower rates.
This is called repricing which means you only sign two or three documents. ”In most cases, we’re not having to order new appraisals and do all of the work associated with a refinance, so you’re likely to only spend hundreds of dollars in fees versus thousands. We can do that as many times as it makes financial sense for that borrower. For example, if a borrower in today’s market is paying 8.5%, and the rates drop to 7.5% or 7.0%, we can modify the note to the lower interest rate. And… if the rates continue to drop to maybe 6.0% or lower, we can modify the note again,” explains Simpson.
Remember not all lenders will offer repricing. You need to find a lender such as First South Farm Credit that offer note modifications.