[july 2010] The first step in the process was buying our land. We had always talked about building, but did not have any concrete plans or a timeline for building. I would periodically look online at land listings and one day I found a list for 13 acres in the part of town we wanted and on blacktop. Our biggest requirements for the area we wanted was school district and no gravel. The price was great, so we went out to drive by the property. It just so happened that the realtor was mowing around the for sale sign, so we stopped to ask him about it. We found out that the owners were selling 25 acres total and the 13 acres we were interested in only had only 60 feet of frontage (grandfathered in). The majority of the property sat behind another house. This was not ideal and we realized that if we bought the 3 acres next the 13, it would solve the issue. Of course the 3 acre price was almost as much as the 13 acres, so we had to consider if the total cost for the 16 acres was worth it. We decided that it would be hard to find 16 acres anywhere, especially that met our requirements, for that price. We submitted an offer and the sellers countered back and we accepted. This by far was the most smooth part of our entire process so far.

Although the interaction with the realtor and making an offer is very similar to buying a house, the loan part is much different. Not many banks offer land loans and the terms are different. Local banks and credit unions are a good place to start. Our loan was for 20 years, 5 year ARM, which was not a big deal since we were hoping to start building before the 5 years was up. 20% is required as a down payment, so this is also where it differs from a conventional mortgage. The down payment becomes part of your equity when you go to obtain the construction loan (as long as the land does not depreciate).

We purchased the land for $14k under the appraisal, so this helped give us additional equity when we obtained our construction loan.

dogs at the land