SE IL | JUST LEARNING - 9/20/2016 11:25
I own a decent amount free and clear and he can see that on my balance sheet. If land dropped 50% tomorrow I wouldn't be underwater on my long term assets.
While you wouldn't be under water, the bank would. If you paid say 6000 for land recently and financed 70% or 4200, if land suddenly went to 3000 the bank has more invested than it's worth. Hence them wanting more collateral. Extreme example but using your half figure. Even if that land went to 5000 lender would be squeamish. Most land loans have language that allows lender to demand more collateral. |
Banking Question
