I wasn't too sure where to post this thread, since it's a pretty complex question that I have, but since it revolves around TX I'll ask here.

For a long time I've been planning to purchase some land, around the Lampasas area since that is where I have most friends and family. I don't think land is really going to go down in value out there any time soon, so I've been trying to educate myself about the whole process since I know very little about buying land.

It would be something that I build a home on in the future, however I'm currently stationed outside of TX. I won't be getting out until at least 4 more years, so my plan was to buy the acreage and then start building a house once I'm closer to ETS.

I looked into VA land loans, and it looks like that would require immediate construction which I don't want to do. So that brought me to VLB where I could get up to $150k loan for just land. Now, it looks like their interest rate is currently at 6.95%. This seems kind of high compared to the VA home loan interest rates I see everywhere that are close to 3%.

I guess I'm trying to get some advice on whether I should get started on this process as soon as possible (would be July of this year before I can make any purchases). Or wait it out, hoping the interest rates will drop lower? I don't know what I don't know, so I'm trying to get some opinions. I don't want to buy at a stupid time where interest rates are high, but I don't want to miss out either. I've sent some emails out to VLB, but still haven't heard back from them. It's a holiday weekend so I understand.

Any advice would be appreciated.

Thanks

ETA: my location says CA, but I left there a few years ago. I do have TX DL and mailing address.

so I have looked at that for a while now. several years actually. never pulled the trigger for various reasons.
7 percent has always been their rate to borrow against.
Which I hear is actually pretty good but it is like a VA loan. You pay more percentage for less money down.
regular banks don't like to loan on raw land.

There are a couple of banks I have heard of that give loans on raw land, but it goes the other way with them.
The vlb max is 150k but these places the min loan is 100k.

https://heritagelandbank.com/types-loans/recreational-property-loans

https://www.fbn.com/
this place claims just under 4 percent.

but as with all things you have to read the fine print and see what they are charging you for, points etc..

there are probably more but I remember these being called out before.

Good luck on the land buying and it looks like you maybe a neighbor to me. I do not know about the loan process but I will give you my experience in finding land.

I bought last year in Burnet county and my modular home is suppose to be put down February 28. Modular is not a mobile home but it is considered mobile by the state. This means lower cost for the house and taxes like a mobile home. Saves money.

As far as land, look for something that has the ag exception already in place. You will have to also find out what will qualify for the exemption in the future. For me on 20 acres it means one cow for the exemption. Means my taxes for 2020 was 26.95 total. Currently I have a rancher running his cows on the land and I have filed the paper work for my exemption.

As far as the house, modular was a quicker option then site built. It is built in a factory in Modular’s and assembled on a regular home foundation on site. Before the virus it was a 6 month build for now it is running 9 months. Also supply issue affects the build time. Cost for a 2100 square foot 3 bedroom 2 bath house was 249k plus 80 k for my site prep.

Site prep included a 1900 foot driveway well and septic. Electric is extra from the power company.

Plan to shop around.

You can pm me and I will try to answer questions that I can. Good luck.

land prices are going up fast, so I would advise to not wait years, but rather to buy sooner to get lower prices (albeit maybe with a slightly higher interest rate?)

Thanks for the replies guys, I'm about to head out to class so I'll respond when I get back.

You can also look at other farm lenders such as Ag Texas, that offer loans on raw land.  The interest rates won't ever be as low as the current home mortgage rates, but the money is available.  There are also special ag loans (some through USDA) for new farmers/ranchers, and you can even get ag exemption for things like beekeeping, wildlife programs, and hay operations, not just typical livestock operations.  That not only helps with the property taxes, but makes nearly all other farm/ranch related purchases (equipment, supplies, tools, fuel etc.) sales tax exempt.

I used a TVLB loan last year to buy the plot I built my house on.  It is pretty straight forward and you will do everything on line, in fact I don't ever remember speaking with anyone.  Couple of points.

$150k is not much.  I actually needed $165, and put 15 down of my own money.  Unlike the VA, this is an actual loan, not a guarantee like a VA loan.  TVLB is loaning you the money like a conventional bank.  If you do not specify, that you want the whole $150k, they will take out a 10% down payment.

The interest rate is a bit higher than some banks, but not by much.  Again this is a loan.  I had to submit all my docs to them, just as I would a loan.  I probably could have obtained a conventional at a better price, but there is no points and I just needed the money for a few months.  But quite honestly, they needed just as much documentation as any bank would.  That said, I think they will underwrite some riskier loans, because of the veterans aspect.

Depending on how much you want to borrow, this may or not be the option for you.  A lot of good advice on the ag exemptions, etc in the previous posts.  My thoughts are that the TVLB has become somewhat outdated due to the increase in land prices.  Not much you are going to get for $150k.  But if it is your only option due to credit or other circumstances, may be for you.  PM me if you need any more detail.

Bunch of the stuff over there is going to start at around $8k an acre and go up from there (for smaller tracts).   Not all, but a good bit.  

And, on the stuff that is cheap per acre, thats likely electricity on the property line, no septic.  

But, like trees, it kinda goes like this - 20 years ago was the best time to buy, and if you did not do it then, of course, now is the best time to buy. Values might wobble around a bit, but absent some massive crash, its likely to continue to trend up.  

Lampasas is kinda blowing up.   Near to major metro areas, and still a bit country with tons of suburban development not too far away.  C. Coves is practically the big city.  Its "west" Killeen.   A town of 150k.

Thanks for the replies everyone, I sent a few of you PMs

waddlingweezol,

I did the same thing with the TX VLB and purchased land while stationed in Germany. Fairly easy to with the VLB. Hard part was the seller and his agent were morons, but that's a separate issue.

Purchased just over 2 acres in Ellis County back in '20 for $65k. Had to put down some money, plus various fees.

Due to a PCSing back to Texas, a divorce, builder issues, covid, it took almost a year to get the builder setup. During that time I just made payments to the VLB Mortgage company.

I finally closed in May of '21 ,before I went to Ft Rucker, on a one-time close loan thru Security America Mortgage. They're financing the build of my house, as well as closed out my VLB land loan. Haven't had to make any payments yet. House started in June, but lumber delays have pushed finish back a bit. Hopefully I'll be done in the next few months.

While a complicated process, doing a one-time close loan (using my VA home loan stuff), after getting a VLBland loan, has allowed me to get the house I want, plus on my own land. Didn't go with a traditional builder either.

Thanks, I sent you PM with a question