On Friday, I learned of a new land financing product that is now available in Tucson. Mutual of Omaha Bank, yes the same company that we think of for insurance, is offering a lot/land loan with 20% down, 20 year amortization and a 2 year balloon payment. There is some flexibility as it can be structured as either an interest only loan or with conventional principle and interest payments. According to Jim Roberts, the Mortgage Banker in charge, the current interest rate is 4.5%. This loan is not available to Investors buying land for speculation, instead, has been designed for borrowers interested in building a custom home within 2 years. Thus, the loan will be paid off by taking out a new construction loan. The construction loan can come from any lender, not just Mutual of Omaha.

This is a MAJOR development in what currently is a pretty bleak market for Tucson land loans. The only other products available are Washington Federal’s 20 year fully amortizing loan with 30% down at 8.75% and National Bank of Arizona’s 15 year amortization, 5 year balloon, with 30% down at 7.50% (please call the lenders to verify the current rates and terms).

Its been several years since we’ve had a lot loan with a rate comparable to a residential mortgage, and although this is not available to Investors and has a short payback term, it is a sign that at least one lender is expecting growth in Tucson’s custom home development market. I certainly hope other lenders will follow.

This entry was posted on Monday, August 23rd, 2010 at 11:36 am and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.