Many homeowners want to explore various options when developing their forever home. Questions come up like, “Is it best to purchase a turnkey home?” or “How much would it cost to renovate an older home?”
One question that comes up is “Should we purchase land and build our own custom home?” However, lot loans in North Carolina can involve quite a bit more than you’d expected.
That’s why you need a loan officer with experience in lot loans. I’m here to help guide you through five things you need to know about lot loans, so you can decide if buying land in North Carolina is the right choice for you.
1. Not all land is lot land
If you’ve found an area of land that you like, you’ll want to be sure you know what kind of land it is. You need to find out if this is lot land or raw land. Lot land is more suitable for residential development for several reasons. It typically has access to utilities, septic systems, and roads.
2. Lot land is more financially viable than raw land
Raw land is not usually ready for residential development. This is because raw land is typically not surveyed or zoned for boundaries. So can be many more risks involved to bring the raw land up to code. Since lot land is ready for development, banks are more likely to offer lot loans for a more secure investment.
3. A lot loan down payment depends on land usage
Just the same as a business investment, banks will determine the down payment for a lot loan based on the use of the land. Banks can see immediate return on investment for an existing home, whereas building a new home on land can lead to many unexpected hurdles. This is another reason why raw land is less favored by banks, and lot land is a safer investment.
4. The better the land, the lower the cost
If you are looking to build your dream home, you’ll want to find the highest quality property to build it on. There are many reasons for this, one being that better quality land typically requires a lower down payment. This is because it will take less time to get residential property onto the land. So be sure to review all the information about the land once it has been zoned and surveyed.
5. There are various loan options available for lot loans
Here is another reason why it’s important to work with a loan officer. Since there are several different aspects involved in financing land, there are several loan options to review. There are home equity loans, HSDA loans, credit unions, and seller financing to name a few. All of these loans should be carefully considered. Working with a loan officer will help make sure you find the best option for your land.
Ultimately, there’s a lot to learn about land loans. By all means, don’t let this discourage you from your dream of building your own custom home on a unique property. But it’s best if you work with a loan officer with experience in the area. You’ll have access to an invaluable resource throughout the process, so you can feel confident in your investment.
When you work with me, you’ll be working with a loan officer who cares. I have experience in helping clients obtain lot loans in Greensboro, Winston Salem, High Point, Clemmons, Raleigh, Charlotte, Piedmont Triad, and other cities throughout North Carolina. And with 30 years of experience, I promise to help you find the best option as you plan for your future.
Contact me today to start building for your future.