There’s no feeling more rewarding than walking into a home you’ve designed for your family. One of the most quintessential American dreams, many of us want to build our own home on our own land, but it’s often easier said than done. You have to find the perfect location, you have to come up with a design that matches your lifestyle, and then you have to find someone to build it for you. While the end product is more than worth it, building your own home does take a bit of planning and financing. We thought we’d help future home builders out with these tips on finding the perfect location for your new home, and then financing the build. Let’s start with finding a lot:
The first thing you’ll want to think about when buying land is where you want to live. Would you rather be in the country, or would you prefer to live closer to a city? Are you buying an independent lot, or are you purchasing a lot owned by a developer in a residential community?
There are benefits to each, so in the end, your lot location all comes down to personal preference. It’s important to make sure you’re considering how your location will affect your everyday life. If you found the perfect lot, but it’s an hour commute to work, then is that really where you want to build? If the location isn’t ideal for you, the lot probably isn’t either, no matter how park-like the setting.
Think About The Future
A lot of people don’t think about this one, but it’s important to consider what your neighborhood will look like in 5-10 years. You should look at any vacant lot the same way you’d look at an existing home. If you really like looking out your kitchen window across a giant field, you need to think about if that land will remain undeveloped, or if it’s possible someone might build on it and ruin your view.
To get to the bottom of these questions, talk to neighbors, talk to the developer, and if necessary, go down to county records to see who owns the lots around you. This will give you a better idea of who you’re dealing with, and what they plan on doing with those lots. This is also a great way to introduce yourself to the people you’ll be dealing with on a daily basis once you move in.
Ensure Your Lot is Buildable
Finally, even once you’ve found the perfect lot, you still have to ensure that it’s buildable. Unfortunately, not all lots you can buy are set up to be built on. Some might lie on protected wetlands, be home to endangered species, or otherwise unfit to live on. It’s important to hire a licensed surveyor to confirm the lot you’re looking at is one you can actually build a home on.
For a lot to be buildable, it also has to have access to water, gas, and other utilities. If your lot is in a relatively undeveloped area, you may not have those utilities hooked up yet, which means you’ll have to pay. And installing lines and pipes to your lot isn’t an easy – or cheap – task. You’ll have to call up each utility company and pay them individually to run lines to your lot. Sometimes this can be very expensive, but if you found your perfect lot, it could be worth the expense.
Double Check for Space and Any Hidden Issues
Finally, you’ll want to make a trip to the county records office to see what history they have on the place. Previous owners are supposed to disclose all information, but that doesn’t mean they always do. By checking the records, you’ll be able to see if there’s any existing piping, septic tanks, or wells that were not previously disclosed.
More importantly, when you head to the records office, you’ll be able to see exactly how much of the lot you’ll be able to build on. Most property laws restrict how close you can build to the property line, which means the amount of land you buy isn’t actually the amount of land you can build on. Your surveyor can also help with this by informing you of local zoning laws. Once you get all of this information, you’ll know how much room you’ll have to build, and what you can and can’t do. This will help you decide if this is truly the lot for you, and it will give you some guidelines once you start designing your new home.
Financing Your Project
The biggest concern when it comes to buying a lot and building a home is financing the project. Not only do you have to pay for the lot, but you also have to cover design fees and construction, which can add up pretty quickly. Luckily, you have several financing options from the bank that can help you get through both buying a lot and then building on it. We’ve explained the three most common loan options below:
Land or Lot Loan
If you’ve found your dream lot, but aren’t quite ready to build yet, a land or lot loan is probably your best bet. A land loan allows you to simply purchase the lot. This way you can build whenever you’re ready, whether that’s when you have design plans finalized, or after the kids move out. Here’s what you need to know about land loans:
- They exist to cover the cost of the lot.
- They do not cover the costs of construction.
- A land loan is most often used when you’re not quite ready to build yet.
- Once you purchase the lot, you can just let it sit there until you’re ready to build, whether that’s a few months or a few years.
When you do decide to build, you can either obtain another loan for construction, or you can pay out of pocket. It’s important to note that if you go about the building process this way, you’ll end up with two separate loans.
It’s good to know that land loans aren’t always easy to obtain. Depending on the type of lot you purchase, as well as the lot’s access to utilities and roads, all land loans have wildly different terms. Lenders aren’t always keen on giving them out, so you’ll want to have a good idea of what you plan on doing with the land, to properly articulate your case.
Like we mentioned before, if you already own a piece of land that you plan to build on, you can take out a separate loan that will cover the costs of construction. Called construction loans, these are best applied for once you’ve finalized your plans, and you’ve found the builder you’d like to work with. These are short-term loans that cover the costs of construction, and they disperse funds periodically. Here’s what you should know about construction loans:
- They cover the costs of construction of a new home.
- If you already own the land, you can use equity as collateral for the loan.
- They can be used to purchase both a lot and cover construction costs.
- If you use the loan to cover costs of the lot and construction, both the closing of the land purchase and the construction loan will happen at the same time.
Construction loans are also fairly difficult to obtain, as they require a great deal of paperwork. To up your chances of being approved, it’s important that you bring detailed home plans to your lender. You should also have hired a reputable builder, and have a contract to show the lender.
Perhaps the most common building loan, a construction-to-permanent loan covers the purchase of the lot, the cost of construction, and will also convert to a permanent loan once the home is built. Many people end up choosing this loan because it is much simpler than other options:
- The loan covers all aspects of purchasing land, construction, and long-term home-ownership.
- You only have to work with one lender, and one loan, which means you only need one closing.
- The loan becomes permanent following the final inspection approval, and the issuance of a certificate of occupancy.
This is also the easiest loan option to obtain, making it one of the most popular choices. Construction-to-permanent loans are an all-in-one option, meaning homeowners only have one payment, and all of their costs are covered when they need them covered, without the hassle.
If you have any more questions about finding or purchasing lots for sale in Asheville, NC, make sure to get in touch! The Sovereign Oaks mountain community has several lots available still, but we’re starting construction soon. For more information, give us a call at 866-936-5263, or contact us online today!