Pay off land, then build house? Or pay off land and build house at same time?

[micah_mae_]

We are looking to buy some land in a few years, but I don't know how would be best to pay for everything...

[JamieCatheryn]

Haven't been there done that yet but am looking into similar. I'll answer your question with a bunch of other questions if you don't mind. How will you finance the land purchase? Where do you plan to live until the house is there? How much will the house cost, will you be building with cash or a loan? What kind of house/how long should it take?

What I'm leaning toward now is a property with an ugly but livable house with land we like so we can buy it for very little and get the smallest mortgage they'll allow, live there and save up a couple years then build our dream cottage ourselves. Definitely don't want to get stuck halfway through building without money left, but really don't want everything than a building loan entails. I just saw a realty listing for a half done 3,000sqft house the other day and felt so bad for them.

[SweetSilver]

Property is not always finance-able (is that a word??) in and of itself.  Most banks as far as I know will want to see approved house plans and include them in the loan.  However, we got our loan from dh's parents and obviously did not have such a requirement.

So, this is what you need to know.  Can you even pull off the loan for both at once?  If not, you need to talk to the bank, but you might need to look for alternative sources of financing.

We are finally building a house on our land.  We've been on the "two year plan" for 15 years!

Edited to add:  these days you might be able to find a large, lovely piece of land with a scrappy foreclosure on it for a pittance.  In our area, they are everywhere.  There used to be some special financing available for these lots, but ???? I don't know if that still happens now.