Step-by-Step Buying Land and Building Our House

There is more to buying land and building a house than you might think.

Financing

• Be prepared to make a deposit.
• A land loan may require up to 50% down.

The first step is making sure you have access to money. It is a waste of time to shop for land before you have something to make a deposit. If you already have a home, you can get a HELOC, a Home Equity Line of Credit. You have access to borrow the money when you need it. If you have any kind of retirement account, talk to them and find out what it will take to borrow against it for money to buy the land. Some people have family that can loan them the money. You can also get a land loan, a  land-to-construction loan or a personal loan from a bank of credit union. Check all of your options to find what loan will have best terms and the lowest interest rate. You will likely roll anything you borrow into the mortgage once the house is completed, but you will need money or access to money to get started.

Set a Realistic Budget

Once you know you have access to money, you can start looking for land in earnest. An experienced realtor can help.

Remember, there is more to the project than just the cost of the land and the cost of the house.

• Land Price
• Site Preparation; Grading and/or Clearing
• Well vs. City Water
• Septic System vs. City Sewer
• Cost to Run Power
• Driveway Cost

Some land is cheap for a reason. Putting in a septic tank may cost more than a sewer connection. A well may cost more than a water connection. The further away the building site is from where it connects to water or sewer, the more it will cost.

Land that costs less may have a higher building cost.

Find Land

Start looking for land where you want to live. Ask friends and family. Drive around looking for For Sale signs. One good resource is www.landsearch.com. These are some things you need to consider when comparing land.

The lot above was an unusual L shape, steep and had a lot of trees that would need to be cleared. Construction costs would have been much higher than the land we chose to build on.

• Zoning
• Distance from places you regularly go
• Confirm property lines
• Check for Public Access or Utility Easements
• Check for Shared Use driveways or wells
• Be sure you can get a permit to build what you want to build before you buy the land.
• Title search
• Perc test
• Flood Plain

You can find out a lot using Google Satellite view. Visit the land at various times of day. Talk to neighbors.

• Building a New House – Buying Land
• Building a New House – Due Diligence and Closing on the Land
• The VERY First Step: Septic Approval
• Building a New House – Can you build in a flood plain?

Decide on Plans

Think about every house you have ever lived in. Make a list of things you loved and things you hated. Remember you are designing a house for the life you live now and in the future.

Look at house plans or modular home layouts and compare them to the list you made. Tour model homes.

• Shopping Modular Homes
• Building a New House – Looking for House Plans
• Schumacher Homes Model in Asheville, North Carolina

You can hire an architect, or choose from pre-designed plans or alter plans to more closely match what you want.

• Building Our New Schumacher Home: Finalize

Once you have decided on plans, there will be a lot more choices to make. You will need to decide everything you want in your house.

• Schumacher Homes Design Studio
• Choosing Countertop Materials
• Choosing the Siding
• Choosing the Soaker Tub
• Schumacher Homes Kitchen Edits and Selections

Find a Builder

To find a builder, ask around. Talk to friends. Talk to real estate agents. Interview them and get detailed estimates. Look at other work they have done. Even if you will have a modular home, you will still need someone to ready the site for the home, build the foundation and finish the home once it is delivered.

If you bought land with challenges, make sure the builder understands and has experience coping with these issues.

Get a Construction Loan

Once you have a firm, detailed estimate from the builder, you can get a construction loan. Be sure to line up credit for more than you think you will need, just in case.

• Construction Loan Draw Schedule

Build Your House

Choose where on your land the house will be built. Consult with the builder. Some locations may cost more to build on than others. A longer driveway will cost more. Some locations may require more grading.

• Building a New House – Choosing the House Location

Before you start building, you builder will get the building permit and you will need to buy Construction Insurance.

Site Prep

The land will look a lot worse before it gets better.

• Clearing trees, grading and temporary power

Construction

• Foundation, framing, roof, plumbing, HVAC, insulation, interior
• Your builder will get additional permits and inspections along the way for electrical, plumbing, septic and more from your local authorities.
• Construction draws disperse money from your loan when pre-defined stages of constructions are reached.
  You will make monthly payments on the amount that has been borrowed up to that point.

Once the house is complete and has received a CO, Certificate of Occupancy, you close the construction loan and convert it to a permanent mortgage and convert the construction insurance to residential insurance.