Land HELOC on 1 Parcel of Mortgaged Land

[Malvern Zimmerman]

So I purchased about 100 connected acres of raw land - split into 3 deeded parcels. 22, 70, and 8 acres approximately. I am building personal residence on the one 22 acre parcel and farming the 70 acre parcel. The entire land purchase is mortgaged. I also have a construction loan for the building I'm doing on the 22 acres. After construction is finished, the entire property (with the residence) will be appraised and I can roll my land loan and construction loan together into 1 mortgage. If the 22 + 70 acres appraises high enough to cover my mortgage, can I own the 8 acres parcel/building lot free and clear and pull a HELOC on it?

If any of this doesn't make sense, just ask. :-) Great to have a place to ask experienced investors questions! TIA

(pic shows the 3 parcels and approximate acreage)

[Kerry Baird]

You will absolutely want to talk with a local lender.  Ask for these scenarios.  Don't let anyone pull your credit until you ask and have tehse questions answered, or every lender in the whole county will pull your credit.  Pull your own and ask them, "With credit of FICO SCORE, what rate and term can you offer me?" 

***The parts are worth more than the entire thing, FYI.

There is a mortgage currently recorded on all the land.  You might want to ask this specific lender, as they already made the initial loan.

The construction loan is not recorded on the land? 

Food for thought: it is easier to get a loan of any sort on the owner occupied part, to include HELOCs.  Interest rates will be lower on owner occupied properties than o other property.

I personally have had need to sell a house here and there. Perhaps consider future flexibility and keep the 22 acres with your home separate from the other acres.  You will very likely have a lower rate on the 22 acres and a higher rate on the 70 acres.

If you want any portion of this property to be free and clear, the lender will have to release that bit of land from the mortgage that currently encumbers it.  This can come at refinance, and the lender will want each portion to be appraised.  

[Malvern Zimmerman]

Thanks! Yes I will definitely be asking my lender these questions - I just wanted to see if there was any input from the investor community before I pursued that thot.

So far the construction loan is based on my income and another piece of property. After construction is completed, both land and construction loans will be rolled together into 1 mortgage.