Buy Land Now, Build Later with the Right AgTrust Loans

Every parcel of land is unique, and until you settle on the plot you want, it’s difficult to know exactly what you’re going to build. There are countless decisions to make — the size of the home, which direction you want it to face, and whether to construct a barn right away. AgTrust has the perfect solution for customers in this situation: Buy land now and build later.

Understanding the Buy Now, Build Later Approach

We understand the challenges that come with rural properties, so we work with a lot of clients who prefer to buy land now, then build later so they have more time and flexibility.

A typical scenario for our clients starts with hunting for their dream land. Once they identify that parcel or tract, we help them finance the right land loan, usually with a 30-year, fixed-rate loan and 20 percent down.

After a few years of owning the land and deciding their vision for it, our clients come back to us for a construction loan. The construction loan can be for a variety of projects, such as a home, barn, stock tank, or grain silo.

This approach is popular with many borrowers because it allows for more customizations, potential market value and equity increases, and the ability to control the building process — from the builder to the materials.

The Pros of Buying Now, Building Later

In our experience, most people looking for land don’t have their house plans complete right away. Taking a two-pronged loan approach gives families some breathing room over the years as they make big decisions and work with their architect, builder, and contractors. It also alleviates the need to make big decisions under pressure and leaves ample time for permitting and planning.

In the long run, depending on how many years you hold the land and its location, your property may be in a high-demand area whose value increases even before construction begins.

The Cons of Buying Land First Before Building

Once you purchase your land, you will have carrying costs associated with it. These include property taxes, maintenance, or utilities. You may incur additional costs for any utilities that need to be set up, such as connecting the water, electricity, and sewage, so it’s important to budget for these expenses.

Land values are always susceptible to market fluctuations, which could affect the value of your property. Another consideration is the timing of your construction loan, as rates can vary over the years.

The Advantages of Working with AgTrust for Your Loans

We provide a one-stop shop for customers to get their land, and later on a construction loan, for everything they want to build. Not only does this significantly simplify the financing process, it gives you a single point of contact for all your lending needs and one portal to service your loans.

As local experts, we can advise on more than just the right loan. We can recommend the best realtors, most trusted home builders, and reliable contractors — and we’re always just a phone call away.

Our pre-qualification program is quick and easy and lets you and your realtor know the appropriate property values to focus your search on. We also have access to the Lands of Texas MLS, a valuable resource of all the listings for sale in our state.

Rural financing is very unique, and as a full-service cooperative specializing in financing rural land and agricultural operations, we are positioned to offer land and construction loans that many commercial lenders cannot, including land that has not had any improvements. Our customers across Texas and New Mexico know they can come to us for great service and competitive fixed-rate offerings for whatever they need and know that we will never sell their loans.

How AgTrust Makes It Seamless to Buy Now, Build Later

Once you’ve taken out a land loan with AgTrust, we’re thankful to have a relationship with you and help with what’s next. Our customers find it exceptionally easy to take out additional loans and that’s by design.

AgTrust’s construction loans allow you to lock in a fixed rate at closing for the life of the loan, but what makes them highly beneficial is how payments work in the first year. For the first 12 months, the loan is in a Funds Held Account, and you only pay interest on the money you use toward your construction. Since we already have all your financial documentation on file, we also save you time hunting down documents and filling out a lengthy application.

For example, if you took out a $500,000 construction loan, but scaled down your project and only ended up using $400,000 to build your house, you will only be charged interest on the $400,000. After 12 months, the loan functions normally, with borrowers making monthly payments on the principal and interest. Our construction loans also require a downpayment, but in some cases, the equity in your property can be used.

Perhaps the greatest benefit we offer our customers is the Interest Rate Conversion Program. When interest rates drop significantly, our borrowers can give us a call and ask for their rate to be adjusted for a small fee. No refinancing. No filling out forms again. No new appraisals. Just picking up the phone to make the request and signing a couple of pages electronically to finalize the details.

How to Get Started

If you’re already considering purchasing land, it’s a good time to call your local AgTrust team. From pre-qualification, to real estate agent recommendations, to the inside scoop on listings, our team is here to help at every step of your journey.

You can fill out a financing inquiry form online and one of our lending experts will help you through the full application process. Once approved, we have a secure portal where you can upload all of your documentation and track the progress of your loan. Have questions about navigating the loan process? You can also call us at 866-AGLOANS and get step-by-step assistance.

Make a Smart Investment for Your Land and Home Construction Loans

Check out our Land Buying Guides for Texas and New Mexico for handy resources tailored to your state. Whether you’re looking for land or construction loans in Texas or New Mexico, we’re here to help you build the future of your dreams. Contact a local lender today to get started.