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Buying Land in Maine. Owner Financing The Way To Go!

               Scenic Maine Land PhotoSo you hope to buy a piece of land...just wander into a bank like a home loan, right? No.

Unlike the secondary mortgage market where you can buy a home with no down payment and the mortgae gets sold to investors, land is a different animal. 

In Maine, you will need 20 to 40 percent down payments and the bank making the loan does not sell the mortgage. 

For this reason, if the bank is hanging onto the mortgage for 15 years, the rate is higher too. 

The Maine bank wants to make it worth their while  waiting for the loan money to trickle in. Sooo..sellers that will carry the note or mortgage should be sought out. You can customize the loan to fit your down payment and monthly installment budget. Some cut - over woodland is available with 100 percent financing with the thinking that the buyer can not hurt anything...the wood that had value is gone. 

If the Maine buyer drills a well ($2800 in Northern Maine) and puts in a septic system ($5500 and up depending on bedroom count /leachfield size)..the property collateral equity increases.  Add a driveway and cabin and the seller's security deepens. The water pump, other hook ups add to the total cost of the Maine land improvements. maine land photo

You pay you stay, you don't you won't though. 

Make the payments that you work out to fit your budget, keep taxes current and don't buzz saw down the remaining little trees.

That could cause soil erosion and make the Maine land look like it had been napalmed. 

Brokers question sellers at listing time on the likelihood or not of owner financing or carrying the mortgage option. 

This is to a qualified buyer...not one that tells you they have horrendous credit score of -309 and that they are without a job, in the middle of bankruptcy protection and that their divorce should be finally over with in three more years..maybe.

Usually the owner of the Maine land does not have to cash it out immediately.

Like they might a home that has a mortgage loan that needs to be paid off. So they can buy their next home.  Also land that might be 20 acres for $9900 can be financed over a five year or shorter period with an easy to manage payment. Five years will be over with quickly as time flies faster the older you get. 

This country is built on installments unfortunately and outright cash buys not as prevalent in Northern Maine as they were 30 years ago. 

The more attractive the terms, the higher the price the seller  can command. If the seller will consider financing, brokers try further to spell out the terms.  It may boil down to a quarter down payment, 6 percent interest over four years with seller holding the first mortage. 

You can not usually sell or transfer the property without paying off the loan.  Loans are not maine fun jeep photousually assumable.  No prepayment penalty a good option for buyers  to make part of the financing plan too.

Also, make your purchase contingent upon satisfactory soil test before you buy to avoid surprises later. 

You want to know the perfect spot you pictured your second home on is buildable. 

If you needed more Maine land for a leachfield, you need to know before you buy the land you have your heart set on. 

If the extra Maine land needed is not available. Or they want a king's ransom for it, you need to rethink what you are paying the seller for the land. 

You need to revisit your budget and decide all told if you stay in this purchase or look for another parcel of Maine land! If you like the land, it checks out to be a good deal but there is no owner financing rather than big down payment and extra closing costs / higher interest rate option, consider a home equity loan.  No down payment, simple  less expensive closing and lower interest rate than you could get from a bank in the local with the Maine land is located.

I'm Maine REALTOR Andrew Mooers, ME Broker

info@mooersrealty.com | 207.532.6573

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Comment balloon 0 commentsAndrew Mooers | 207.532.6573 • August 12 2007 07:40AM
Buying Land in Maine. Owner Financing The Way To Go!
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