First Time Home Buyer: Construction Loan and Buying Land

Forum|Forum|6 years ago
April 23, 2019
2 replies
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My fiancée and I looking to move into a house in the next year or so, and we’ve been seriously considering the merits of building a house versus buying an existing one.
We just found a great plot of land that could be great to build on. Where would you even start in a process like that, though? With a construction company? Or a lender? Or a realtor, to buy the land?

Carl11_2

Employee

Step one is to get married first. Then step two is to buy the land. It's best if you can pay cash and own the land free and clear. Makes getting the construction loan that much easier, simpler, and with a better interest rate.

Then without getting into to much detail, the next step is to have a designer create construction blueprints and meet your needs and conform to all laws at all levels that govern new construction. For example, plumbing and electrical codes, sewage disposal, setbacks, and any local ordinances (such as height restrictions) that need to be adhered too.

So when it comes to getting the construction loan, much less finding a builder, you've got quite a ways to go before having to even think about that. Now just so you know, you can expect to spend between $5-10K for construction blueprints and plans. The final cost of that depends on a number of factors such as size, building codes, and of course your personal design/layout desires.

NCPERSON1

To buy the land, begin with calling the seller

A realtor is not necessary but can help with negotiating price and signing the contract. Etc , so they do have value (which you pay for through the commission) but not a requirement

For money, it is best if you can pay cash for the land as banks perceive lending on lots as very risky so the cost to you would be higher. Banks can also provide construction loans