Home buyers will often ask what are the steps needed to get started in building their new home. Two of the most basic things are 1) Financing and 2) Acquire Land
Some leave financing to the last. Granted none of us usually look forward to spending money, especially in the amounts often required to build a home. However, there are a number of reasons why talking to a lender should be the first thing you look at:
- You may not qualify for a loan
- You may not qualify for as much as you hoped to
- You may qualify for more than you hoped for
- If you’re buying land, sellers and RE agents will take you more seriously
- The lending industry is changing all the time; stay ahead of it
If you have the resources to pay for a project with out of pocket cash payments then this can work in your favor. Oftentimes though, it is necessary to obtain financing through a lending institution. With interest rates at historic lows, and with True Built Home’s affordable, attractive homes, this is actually a good time to be getting prequalified.
There is little point to buying a home it there is no land to put it on. So your next step before you order your home is to find land in an area you like.
If you have land already, or are replacing a mobile or manufactured home then this will help you with financing as well as much of the site development will already be done. If you don’t already have land, then you will need to find a parcel.
A real estate agent can be a good resource; however, here is a ‘heads-up’: be sure that any real estate agent you use is a land specialist. This is not a specific license; however bare land has issues that an existing house will not have, such as setbacks, well/water, sewer/septic, buffer areas and so on. We have known of some poor folks who’ve bought a parcel of land through an uneducated real estate agent, only to find that the land was unbuildable, or when they got through with the setbacks and buffer zones, the area that they could build on was about the right size for a teepee. Make sure they know what they’re doing.
Also, real estate agents make a much lower commission on bare land than they would on an existing home and so often will ‘steer’ you towards an existing house rather than encourage you towards building. This is also why so few real estate agents understand land-it just doesn’t usually interest them as much.
Sometimes rather than looking for ‘land’ you might be better served by looking for a mobile or manufactured home. There are at least two reasons for this:
1) People who own bare land often don’t list it.
2) A mobile or manufacture home will often have all the utilities there at the site. So even though you may pay more than you would for bare land, you will also save on some of the site developments costs you would pay on bare land.
The reason you would want to get financing arranged before you look for land, is that a seller and his real estate agent will always give first priority to what they would call aqualified buyer-basically meaning that they have money.
If you have already received a prequalification letter then you are a step ahead. However, if you haven’t and the seller receives your offer and another offer from someone who is prequalified, then they will likely accept their offer first. You may lose a piece of land that you’ve fallen in love with.
Once you find a piece of land that you like, you would make an offer “contingent on passing a feasibility study”, usually of 30 days. During this time you would do due diligence of making sure that your financing is secure, and that the land is buildable. You want to verify that any house you pick will fit on the footprint that is allowed on the parcel. It would be good to call the local building department to see if there are any known issues with the land. If you are near a body of water or running water you should know if there is a buffer zone setback. It would also be important to know if you are in a flood zone.
Most people do not do all of this themselves-they hire a civil engineer or project coordinator to verify these things for them. Usually you can expect to pay about $500 but this is money well spent. It can save you a lot of money later.
Once you are satisfied that your land is good, that you have funding, and that the seller has accepted your offer, it is time to come in to order your new True Built Home. Call the office nearest you to set up an appointment.