The Complete Guide To Buying Land And Building A House
Author:
Jamie JohnsonApr 4, 2024
•8-minute read
If you’re not happy with the homes currently available on the market, you may want to buy land to build a house. When you build your own house, you have the freedom to decide what matters to you and create a custom home that meets all your needs.
But the process of building a house is complicated, and there’s a lot that can go wrong. This guide will outline how to buy land and build a house so you can determine whether it’s the right choice for you.
How To Buy Land And Build A House
There are many steps that go into buying land to build a house and it’s easy to become overwhelmed. The first major step is to identify where you want to live and how you plan to pay for the property. From there, you can begin working with a builder to begin the construction process.
1. Consider Where You Want To Live
Before you start working with a real estate agent or looking at land, you need to figure out where you want to live. Take some time to think about your goals and what makes sense for your lifestyle.
Is it important that you live close to the city, so you have easy access to restaurants and activities? Do you spend a lot of time outdoors and want to be close to parks and other outdoor activities? Or do you have young kids and are looking to build a community in the suburbs?
Figuring out what your priorities are will help you determine the location that makes the most sense for you. From there, you can begin looking for land that meets your needs.
2. Figure Out How You’ll Pay For The Property
Next, you need to figure out how to finance buying land and building a house. Listed below are some financing options you can consider to purchase the raw land. Keep in mind that some lenders, including Rocket Mortgage®, do not offer these options.
Land Loans
A land loan is a type of financing used to purchase a plot of land, and it can be used for residential and commercial purposes. A land loan tends to be more difficult to qualify for than a typical mortgage since there’s no home the lender can use as collateral. For that reason, you’ll likely be required to put down an initial deposit on the loan.
Assuming you qualify for the loan, you’ll receive the funds to purchase the land of your choosing. You’ll then repay the loan with interest over a set repayment period. The repayment terms you receive will vary depending on your lender.
Personal Loans
Another option you might consider is taking out a personal loan to purchase the raw land. Personal loans are offered by banks, credit unions and online lenders and can be used for any purpose. And personal loans are unsecured, so there are no collateral requirements.
Personal loans tend to be easier to qualify for and don’t come with any down payment requirements. But you’ll likely receive higher interest rates and shorter repayment terms than you’d receive on a land loan. If you’re interested in a personal loan, check out our friends at Rocket LoansSM.
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