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Owner financing land in Texas is a great way to purchase land without the need for a bank loan. However, there are certain things to be aware of and avoid when it comes to owner financing. This article will discuss four key things to watch out for when owner financing land in Texas. By understanding and avoiding these common pitfalls, buyers can ensure that the process of purchasing land through owner financing goes smoothly.

1. Confirm When & Where You Are Allowed to Build

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While owner financing your land can look like the best option for you to buy your land, you need to understand what restrictions exist for when and where you can build. There may be easements or minimum square footage for builds and you need to know those so that you buy the land that best suits your needs and wants. The last thing you want is to buy the land you want and find out that you can’t build what you want due to different restrictions. To avoid this, you can simply ask if there are any restrictions you need to be aware of and ask what the process is to get buildings approved. This will allow you to have a great experience from buying land to building on it.

2. Know All The Terms Are For Your Owner Financing Loan

So many people get fixated on the purchase price of their land and never look at the terms like loan percentage, the length of the loan, or other costs included in the loan. Here at TX Lands, we will deal with you fairly and find a win-win solution but that is not the case for all organizations that sell land. So be sure you are very clear on the loan terms. You also want to be aware of any early payment penalties when you are owner financing land. Most of the time owner financing land is not a long term solution but you still want to make sure you won’t be penalized if you pay back the loan early.

3. Know If a Credit Check or Referencing Will Be Required

One of the benefits of owner financing land is there are fewer requirements to get “approved”. However, there will still be some requirements, which is dependent on the seller and what they want to see. If someone is willing to lend you money without any kind of referencing or confirming your ability to pay, proceed with caution! Typically in those situations you will end up paying for it one way or another. Normally it comes with an extremely high interest loan or a very large down payment. To avoid these scary situations, be sure you know as soon as possible what the seller expects to see from you to confirm the loan.

4. Make Sure You Can Afford The Down Payment & Monthly Payments

This one seems obvious but it sneaks up on so many people who are buying land. You want your land to be a blessing, a place for you to enjoy all the hard work you put into being able to buy this land. The last thing you want to do when owner financing land is to buy it and find that the payments are a burden on you. Part of this risk should be mitigated through the sales process where it’s confirmed that you have the ability to make the monthly payments. However, you can negotiate the monthly payments lower by offering a larger down payment, if possible, or have a longer loan term. However you chose to do it, be sure that you are setting yourself up for success when buying land and that it is something for you to enjoy.

There you have it! Four things to avoid when you are looking to owner finance your land. Want to keep learning? Check out these tips for owner financing land in Texas.

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Our Land Experts make finding your perfect property a priority and aim to make this process as easy as possible. They save you time, money, and uncover hidden issues for first-time buyers.