Copy of Financing Vacant Land — Section Quiz – Agents Advantage Real Estate Academy

In the lender interview, which loan best fits a buyer who has plans, a contractor, and is ready to build right away?

A construction (construction-to-permanent) loan

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A raw land loan held long-term

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A standard 30-year home mortgage

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A home equity line of credit

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Which best describes raw land?

A cleared, build-ready lot with utilities at the street

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Undeveloped land with no utilities, access, or approvals

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A parcel with a finished home on it

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Any parcel located inside a subdivision

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Why do lenders treat vacant land as riskier collateral than a house?

Land always loses value over time

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There’s no income and no structure to fall back on, and a thinner buyer pool if they foreclose

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Land can’t legally be used as collateral

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Land is never approved for building

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Compared with a typical home mortgage, a land loan usually requires:

A smaller down payment

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No down payment

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A larger down payment

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The same down payment

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Compared with a 30-year mortgage, land loans typically have:

Longer terms and lower rates

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Shorter terms, higher rates, and sometimes a balloon payment

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Identical terms

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No interest

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Where is a buyer most likely to find a land loan?

A big national online mortgage lender

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A federal student-loan servicer

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A local community bank or credit union that keeps the loan in portfolio

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A national credit-card issuer

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In the interview, the lender says the single biggest thing that can stop land financing is:

The parcel isn’t buildable — no zoning approval, or a wetlands problem

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The seller won’t negotiate on price

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The lot is located inside a subdivision

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The buyer wants a 30-year term

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According to the lender, what does a perc test determine?

The market value of the land

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Whether the soil can support a septic system and a foundation

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The zoning classification of the parcel

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Whether the property title is clear

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Why can two otherwise-identical lots differ in value?

Larger lots are always worth more

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Value depends only on location

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One is easier to finance, which widens the pool of buyers who can purchase

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Financing has no effect on land value

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In the interview, an approved building lot (versus raw land) matters most to:

The loan itself — the lender won’t lend otherwise

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The appraisal — approved lots in a subdivision have more comps to appraise against

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The property taxes only

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Nothing at all

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Copy of Financing Vacant Land — Section Quiz

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