If you have located the perfect parcel of land on which to build your future vacation cabin but lack the positive credit rating necessary to secure a bank loan to purchase it, then you will be pleased to learn that there are many solutions to this common problem.
Solution 1: Approach the Seller about Owner Financing
Since many people are selling bare land lots because they were purchased as building sites that were never utilized, owner financing is one way for the seller to earn some extra money on their mistaken purchase. By carrying a mortgage for you, the seller will make some extra money on their land sale, and you will be able to purchase their "mistake" without needing a bank loan. Many sellers are willing to offer financing to help improve their own financial situation and to recoup on a mistaken purchase.
Solution 2: Ask a Friend or Relative to Co-Sign a Loan for You
If you are certain that you will be able to make all of the payments for your land purchase, then you can always ask a good friend or a relative to co-sign a bank loan for you. By co-signing, your friend or relative is agreeing to repay the loan themselves if you do not make the payments, so you should take this situation very seriously if you decide to use a co-signer.
Solution 3: Ask a Friend or Relative to Consider Providing You Financing
If you have a wealthy friend or relative who is looking for an investment opportunity, then you can ask them if they would be willing to offer you a loan that is backed by the land that you are purchasing. In this case, the person who is offering you the loan would need to purchase the property and then make a loan agreement with you to carry a mortgage on the land. This solution can help you to more easily purchase the property and it can help out the other party by providing them an opportunity to earn a higher rate of return on their money than having it sitting in a savings account. If you fail to make the payments, then the owner can foreclose on you and sell the property to someone else.
Solution 4: Use a Hard Money Lender to Obtain Financing
Finally, if you are not able to obtain financing in any of the above ways, then you can use a hard money lender to obtain the financing necessary to buy your property. While hard money lenders will loan money to those without credit or with bad credit, you will pay a higher interest rate to borrow the money. However, this can be a reasonable solution if you anticipate being able to pay off your land loan in a reasonable amount of time.