It can be a great decision to buy land for the construction of a new home. It is a decision that you should research before making the leap to build your dream home. A traditional mortgage is not available for home builders. A different loan type will be required until your home is completed before you can apply for a permanent mortgage.
HOW TO BUY AND CONSTRUCT A NEW HOME
Building a house on land that you have previously purchased requires some basic steps. This post will give you 10 reasons to first buy land and then build your home.
1. Locate the land parcel you wish to purchase.
A trusted, knowledgeable real estate agent.
Through your home builder.
All by yourself.
2. You can now move forward with the land acquisition process.
A bank or mortgage company can help you obtain a construction loan.
A construction-only loan offers a lower interest rate for a year and allows you to buy your real estate or build your house.
To pay only the amount you require at the time for the next phase of construction, such as purchasing materials or labor, you receive advance payments during construction.
Get a loan for land.
Raw land loans are for land that is completely undeveloped, and may be more difficult or expensive to finance.
Unimproved land loans are for land with some utilities, but still requires meters for electricity or gas and a phone line.
A lot with access to utilities and a road is eligible for an improved land loan.
Or choose a construction-to-permanent-loan
This loan lets you borrow money to build your home. The loan can then be converted to a permanent mortgage (or end loan) with a fixed rate (15- or 30-year term.
This allows you to close one deal with only one payment of closing costs. It reduces your overall fees.
Cash is required to purchase the whole lot.
If seller financing is available, you should consider it.
3. Be sure to choose a custom home builder with care.
This article will provide 6 reasons why you should choose a custom builder.
4. Choose your home design and floorplan.
You can hire your own architect.
Select from the available house plans provided by your general contractor.
You can design your home.
6. Get your belongings ready to move and get rid of your old house.
If you have a need, rent an apartment or home.
7. After construction is completed, you can switch to a mortgage loan.
You are set if you have a single loan!
It is easy to navigate the process if you have a trustworthy realtor, lender, or custom home builders Myrtle Beach beside you.
WHAT IS THE PRICE OF A NEW HOME ON MY LAND
You can build your home in a subdivision if the land is already prepared. All utilities are available. The road is already in place. These costs will impact the cost of your lot.
Consider all costs associated with preparing your lot for construction, especially if you are building a home in rural areas that aren’t developed.
There are many factors that influence the cost of building a house on your land.
What size square footage will your custom home need?
Do you want to buy land with utilities? Consider the cost of connecting utilities if it is undeveloped land. Depending on how far your lot is from existing utilities, the cost can easily reach $10,000 to $30,000. Make sure you verify the distance and cost of your utility hook-up including water, electricity, and natural gas. For an estimate, ask your local service provider or a contractor.
Before you buy land, make sure to investigate the costs of drilling and maintaining wells. Depending on the required depth, a well can run from $2,000 to $25,000 While a septic tank is likely to be less expensive than public sewer fees per month, the cost of installation could run from $3,000 to $20,000.
Be aware that tap fees will apply to your phone, cable power, gas, sewer and water if you buy developed land. You will also have to pay per square foot for the extension of the lines from your home to the road.
Make sure you ask about the fees and permits your jurisdiction requires. These fees can add up.
What work is required to prepare the land for building, and to do lot prep? You will need to survey, remove trees, grade, and find drainage solutions.
- What size driveway are you going to need?
- What is the cost of the house?
- Do you need landscaping? How much?
- Are you planning to install an in-ground swimming pool or other amenities?
Before you start building your home, get a rough estimate from your builder. You can calculate a precise number once you know how much land you have and the design of your home is complete.
Consider additional costs when building a house:
Closing costs typically run between 2-5% of the total cost of the home and land.
The average real estate commission is 6% of the land’s price.
On average, property taxes cost more than $3,000 annually
According to Valuepenguin.com, homeowners insurance costs between $400 and $3,000 annually.
Smartasset.com estimates that home owner association fees can cost between $100 and $3000 per month, with an average of $200 per month.
Building a home can be an exciting experience. You have complete control over where your home will go and what it looks like when it is finished. What matters most is that you find the right home for you and your family. We are here to help you find the home of your dreams.