Buying Land and Building a Home Question??

[marshall_mosty]

My wife and I are wanting to buy some land to hold until we can build a house. We are wanting to buy the land now (Jan. '07) and move in to a completed home in Jan '09. So, I'm guessing the land will be vacant for a little over a year until construction begins.

We would obviously take a land loan to originally purchase the land. In speaking with lenders last year, it seems that 10/10/10 is the norm (10 years/ 10% interest/ 10% down) on the land loan. Would we be able to roll the balance of the land loan into the final mortgage?

I guess the steps of the financing are:

1. Land Loan
2. Construction Loan
3. Final Mortgage (wrapping the land and construction loan together)???

[GlennCMC70]

you are required to "roll" your land loan over into the mortgage.
if you didnt and defalted on the land and not the house, what can the bank do?
use the eqity built up in the property to be the "down payment" on the final home land combo.
you will find alot of places require you to have a home built in less than 1 year. we did alot of looking till we found our "spot". looking to build in a couple years.

[David Love AI27]

I was a REALTOR/Appraiser for 18 years... I also taught for a while a Champions School of Real Estate

1.) unless you pay cash for the construction, you will be REQUIRED to put the land up as part of the overall finance package.

2.) Technically the land is what you hold title to and any "improvements" to the land become a fixture or what is referd to a "real property".

3.) In most cases you secure a mortgage before construction begins because a construction loan is VERY short term and the builder wants to be sure the mortgage funds will be available when the construction is complete.

4.) I have rarely seen a time limit on when you are required to begin construction but almost all restricted subdivisions do have time limits on completion dates once the construction has begun.

5.) The 10/10/10 concept is just a theory. Sometimes company credit unions will give lower downpayment requirements and lower interest rates, in addition, small independent banks will offer some pretty good deals, especially if you are a long time customer. Shop around.

I can give more details on the final mortgage proceedures including the possibility of "no money down" theorys... PM me...