Can I use my lot as security on a credit line?

Question

I purchased an empty lot next to my house. I'm very glad to have it, but I did naively think that perhaps that I could use this lot as something like a credit card. Using it as collateral for a credit line for home projects and such.

I've since learned that its not as easy as all that. Lot loans have many restrictions and are created to be a precursor to building a home. Land loans, or AG loans, banks usually want to lend hundreds of thousands of dollars, and I'm not interested in near that amount.

Is there a product that might allow me to borrow money against my land (that is a reasonable rate)? Or is this a completely foolish idea and you need to talk me out of it?

EDIT: The lot is worth about $80k US. I would like to get a rate commensurate with the security I'm putting down. Perhaps I'm up in the night, but between 5 and 10 percent ought to be reasonable I would think.

Answer 1

Short answer is, ANY asset can be used as collateral - you simply have to find someone who's willing to accept it as such.

Since you didn't indicate how much of a loan you want relative to the lot's value, I'll assume you want up to the land's appraised value.

A good source for loans like that would be your local credit union. They have pretty flexible terms and are often much more willing to work with smaller loan amounts than the commercial banks (Chase, BofA, etc). If you aren't a member of one, check into what it takes, but these days it is easy to qualify. If you're a military veteran (or dependent of one) then there are several that cater specifically to that demographic and offer fantastic loan rates.