Considerations when buying land

Asked by Adam, Yonkers, NY Tue Jun 10, 2008

Hi folks, I'm considering buying land for building a home in due time. I don't mind "sitting" on the land for some time if the mortgage is reasonable. How are loans for land transactions treated? I'm somewhat clueless so any and all input would help.

Thanks and God Bless!

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Jim Johnson, , 78233
Tue Jun 10, 2008
Financing on unimproved property generally requires more down and carries a slightly higher rate. Some things you should consider are: whether or not utilities are in or available, and the cost of putting them in; if a waste water disposal system is not available, can you put in a septic system, what will it take to get a permit and what will it cost; if future value is a consideration, what restrictions are there on the property that might help protect its value, and what other factors do you anticipate may affect values.

If you are concerned about energy costs, you may also want to consider the suitability of the property for installation of alternative energy devices/systems at the extreme end, and distance from shopping and services you may require a the least. How about the distance to and availability of medical services?
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Gail Gladsto…, Agent, 11743, NY
Tue Jun 10, 2008
The first thing I will advise is to discuss this with a mortgage broker (contact me off line at if you need a referral).

From strictly a personal experience basis, you can get a construction loan. The construction loan starts at about 1/3 of the anticipated cost; you are only paying on what you take as you go along. As construction gets completed and you need more $, the loan will increase accordingly. When the house is complete, the loan converts to a standard home mortgage loan.

Regarding a loan for just the undeveloped me off line for the name of a good mortgage broker.

By the way, I just took a listing for 186 acres in Ava, NY (near Rome) on spectacular property with a creek if you are interested :}
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Milton D. Jo…, , Bronx, NY
Tue Jun 10, 2008
Number one thing to consider about land before price is zoning! Do your research our as they say in real estate "due diligence." Zoning effects what the land can be used. Also the square footage of the property, number of stories, yard space (front rear side), even if you can put a detached garage is effect too.

Before Purchasing:
1.Consult an architect and see if the land meets your current and future needs.
If you ever need to expand the size of your property
(e.g. If your family grows or if you have more money available)
2. Seek financing for the land and for future construction needs.
3. Se what have sold recently and in the past and compare to what on the market.
You do not what to pay for something that is over priced on unless it is some thing that you ca not do without.

Finally good luck!
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