Quote:
Originally Posted by ///d
When looking to buy land to build on, how does it work? I'm looking to buy land and build in the near future, but my current location prevents me from being able to talk to a bank about the process.
Do you buy the land first, and once you have the land then talk to the bank about a construction loan?
Or is it like applying for a mortgage where you get the number for the amount you can spend total, then you start your land and contractor search? For example bank says you have $500k, contractor says your construction is going to cost up to $200k, so you then have up to $300k for land? (way more than I intend on spending, but just examples)
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Not the be "That Guy" but if you rewind back to page 1 of this thread and start reading, i've lived through many of the questions you have. I've detailed every step of the process we went through. Try that and if you still have questions, by all means post them up.
Most banks dont like dealing with land loans. If you default, they get stuck with a piece of property that's undeveloped and much harder to sell than a property with a house. of all the banks out there, only a small % do construction loans and of those even a smaller % do land loans. It is entirely possible to get a loan for the property, then a loan for the construction, or to wrap them all up into 1 loan, but it's a more complicated lending process and the bank will make up for the added risk with much higher interest rates.
We did the following:
Step 1 - Get HELOC on current house
Step 2 - Buy property outright using HELOC
Step 3 - Refi current mortgage + HELOC into new mortgage at lower rate
Step 4 - Pay for "soft costs" out of pocket (we are in this phase now)
Step 5 - Get construction loan and begin construction (Mid next year)