Planning to buy land, build house, rv, etc.. how to do this?

[AllysonB]

DP and I are planning to buy some land out in the country, buy an rv, and build our house. We want an rv, so that during the building of the house we can pickup and travel as we wish. We will be homeschooling, doing the whole homesteading thing.

I am wondering if and how does one get a loan for a "house" when we plan to in fact use it for: the land, rv, and building of the house. We are planning to have professionals build the shell and do the wiring and plumbing to the house, but we will be doing the rest mainly as can be afforded. We are actually going in with his family to buy off of family land (they will have a more substantial amount and we will likely start off with a couple of acres), therefore that will not be a significant cost.

I am looking for feedback. Any thoughts or input is appreciated.  :)

[Caneel]

I am going back to my real estate and banking career to try to offer some information.

You could get a loan to purchase the land only.  In my experience, land loans require a 30% down payment and typically had an amortization of 10 years or less.

Based on what you describe, it will be hard to get a conventional home loan.  Banks that sell their loans on the secondary market typically will not finance a less than complete house.  They are going to want a set completion date so they can sell of the loan.  Also, depending on where you live, you might run into code and occupancy issues if your building permit runs out before you get the house finished.  (Newly enacted building codes are causing heartburn where I live, a place where your plans are common.)

If you get a construction loan, the bank will release money to the builder based upon the percentage of completion of the project.  I did see the homeowners get financing for their own work but they were also in the construction business.

We are actually going in with his family to buy off of family land - by going in, does that mean on the same deed?  If so, that makes it even more difficult. 

Thinking from another direction - is it possible the family will owner-finance the land for you?  If so, if you can pay them off prior to building, it probably won't be too hard to get a loan against the land only to build the house.  That way, you could do the house totally on your own terms as the bank would/should only care that the loan was secured by the value of the land. 

[limette]

You can get a building loan. Have you looked at pre-existing houses? It's a lot less wasteful than building new.

[AllysonB]

By going in with his family, I mean that they are buying a large chunk and we will by our small amount off of them directly. So we will not need a huge loan for land. Simply a smaller amount that I wanted to get sort of all in one with what we are wanting to do.

We plan to pretty much "live" here forever, this will be our family home, so we want to build it just the way we want. If we buy chance came across some land that had a house we could work with, as in renovate some, then that's definitely not out of the question. But we aren't counting on it.

Ideally, what I hope to be somehow possible, is for a lump sum loan that we sort of cash out and pay "this" part to the builder, "this" part for the rv, and "this" part for the land. Is nothing like that possible.

I know with like auto loans, for example, you get approved for X amount and say you buy a vehicle for less than that amount, well you just fill out the amount up to that point. Well I am wanting to get it sort of like that but ok, say as far as I would tell the bank it's a loan for X, and that amount will cover all of what I am needing, but obviously I can't just write the check out to one business or person. I am not wanting to do three different loans. I know people do consolidated loans so isn't this similar?

[Caneel]

Quote:

Originally Posted by AllysonB 

Ideally, what I hope to be somehow possible, is for a lump sum loan that we sort of cash out and pay "this" part to the builder, "this" part for the rv, and "this" part for the land. Is nothing like that possible.

I know with like auto loans, for example, you get approved for X amount and say you buy a vehicle for less than that amount, well you just fill out the amount up to that point. Well I am wanting to get it sort of like that but ok, say as far as I would tell the bank it's a loan for X, and that amount will cover all of what I am needing, but obviously I can't just write the check out to one business or person. I am not wanting to do three different loans. I know people do consolidated loans so isn't this similar?

Consolidating loans are typically an unsecured term loan or a home equity line of credit secured by a first or second lien on the borrower's residence.

If you had the collateral to cover a for example, a $200,000 loan, you could feasibly borrow the full amount and use the money however you wished.  

But if you intend to use all three - land, RV and the buildings - as collateral, you best bet would be to go to a local, independent bank who might be willing to structure the loan to meet your needs.   

An RV is a depreciating asset so most banks would want to have that as a seperate loan with a short(er) amortization period and have it secured by the title - just like a car loan.

[Denvergirlie]

I doubt you will find a loan that will cover all three of those wish list items, unless you have significant capital to gaurentee the loan.

Land loan - will need to put at least 30% down, maybe a max of a 10 year loan. However, you mention that this is family land already? It's going to be pretty much impossible that any bank will loan you money without the land having it's own deed. So unless family buys land and then subdivides the land to get you a stand alone deed, your are going to have basically no luck on that front.

RV loan - would be a stand alone loan, as it's tied to a specific asset. it would be best to save and buy a used RV outright, over trying to buy new and have it depreciate 20% when you drive it off the lot. Or buy used from a dealer. Can get loans for used Rv's just like a used car, but as a PP mentioned, it's a depreciating asset, like a car is.

House loan - you would need to have the house on a specific deed property, not a part of a larger family lot that you build on. Reason being if you can not make the payments, the bank can foreclose on the property. You can get a construction loan, and when building is complete, roll it into a traditional mortage. Banks will most likely want to see that you own the property the house will be built on, so that you thus are invested in making payment, no different from putting 20% down on a traditional mortage.

[AllysonB]

As far as the land, I believe we are going to have it subdivided by his family and have that part, with a deed, as our own.

Of course we are going to buy a used RV. We are no fools! :P

We are not looking for some ridiculously large amount of debt here, mainly for the house to be built, but of course a small chunk for the RV and a smaller chunk for the land.

Thank you ladies for the info, this really helps alot! :)

[diana_of_the_dunes]

Regarding subdividing the land...  Make sure you check your local building and zoning ordinances.  In my area, you need 20 acres to build if it's zoned agricultural.  If it's residential or single family, our ordinances allow less land, but they can still be picky.  Our neighbors planned on subdividing a chunk off their land for their son to build a home on... but the county wouldn't approve it.  Make sure you can get approved before you do anything!

[Caneel]

Originally Posted by diana_of_the_dunes 

Regarding subdividing the land...  Make sure you check your local building and zoning ordinances.  In my area, you need 20 acres to build if it's zoned agricultural.  If it's residential or single family, our ordinances allow less land, but they can still be picky.  Our neighbors planned on subdividing a chunk off their land for their son to build a home on... but the county wouldn't approve it.  Make sure you can get approved before you do anything!

Good advice.  We own a cottage in an area where the minimum lot size is 5 acres for residential use. Ag use is 10 acres. 

Another thing you might want to start thinking about is researching is what type of septic system you might need.  A standard septic is a couple of thousand, a sand mound is $10,000-$15,000 and I have seen plenty go over $20,000.  I live in an area where this is becoming a huge issue.