Cant decide between buying a house or buying land and building our own house, (acting as owner/builder).what does a land/build mortgage look like?

Asked by Susanna, Bolton, MA Tue Nov 22, 2011

We would act as general contractors: subbing everything except the landscape, siding, and interior trimming.

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8
Sherry Graham, Agent, Chelmsford, MA
Thu Dec 5, 2013
You have to make sure the land is perked, then the permits to start and you would need proper plans from an architect. There are a number of new developments in Bolton right now that you can look at instead of trying to act as your own builder. You need an agent that is familiar with the building process and the permitting process. Our firm specializes in new construction, so you can give me a call if you need help.
1 vote
Kevin Santos, Agent, Hudson, MA
Tue Nov 22, 2011
Susanna,
I hate to dash any dreams you might have of building your own home....however as stated in some of the answers below, it isn't as easy as many consumers think.
Obtaining financing is extremely difficult and in most cased requires that you have very high amounts of cash in reserves, excellent credit, and in 9 out of 10 cases the interest rates are higher than most consumers can afford. That said, there are a few local lenders in our area I would suggest you meeting with.

You should also be aware that when you act as your own GC, you are also your own warranty, that means you will have to make it right at your own cost. Even builders with years of experience don't always get it perfect on the first try. In my own personal experiences, things aren't always as simple as they make them on "HGTV"....actually if they could lend me there behind the scenes crew some of my own home improvement projects might have turned out better!

That said, my statements don't mean your dream is impossible. It however does suggest that it might not be the most practical or efficient route to take. At the end of the day buying a home is stressful for any buyer; buying and ANR ready to build lot and building a custom dream home is even more stressful. Should you decided this is the route for you....I can't stress enough how important it is for you to meet with qualified expert who can counsel you on "all" the aspects of this option.

As the other responders suggest, I would suggest you weigh out some of the pro's of purchasing in a new neighborhood of homes being developed and built by a local developer/builder. Some great developments have already been suggested herein, and I'm aware of at least 2 more new developments in Bolton that should be coming online in the very near future. Or as others have suggested you take advantage of the current affordability to purchase a property that might provide you with the option to put your own stamp on something that already exists.

I hope you find my comments helpful. If you have any question don't hesitate to contact me.
K. L. Santos
klsantos@kevinlsantos.com
Web Reference:  http://www.kevinlsantos.com
1 vote
Territory.c…, Agent, MA,
Mon Nov 28, 2011
Financing land is extremely difficult and requires 50%+ down payment. If you have access to cash it could be a great opportunity just make sure you do proper due diligence on the process and choose a good stable market.

Good luck!

http://territory.com/
Web Reference:  http://territory.com/
0 votes
, ,
Tue Nov 22, 2011
You probably can’t get that type of loan unless you are in such a good position that you really don’t need to borrow. I used to do them a lot, but haven’t had such a loan product for several years. If you are a house building contractor that may increase the odds with a local bank, if not I doubt any lender will be interested. It is hard enough getting a construction loan for a builder.
0 votes
John Fortener, Both Buyer And Seller, Atlanta, GA
Tue Nov 22, 2011
Something you might want to think about.
With the Home Affordability Index at an ALL time High, which takes into account the price of homes, cost per sq ft, interest rates, etc., When you buy a re-sale now, you are basically paying "Wholesale" (or at a discount).
But Buying land and building (either with a builder or yourself), you are paying retail.
One more thing, if you are looking for the best Value or the best investment for your money, then consider this: all appraisals have a "Market approach" value and a "cost approach" value. The Market approach is the only value considered and the Cost approach value is ignored.
0 votes
Sandra Naroi…, Agent, Bolton, MA
Tue Nov 22, 2011
Susanna,
If you are going to build in the Bolton area, Clinton Savings bank offers some nice new construction packages. In my opinion and especially in reference to Bolton, I think you'd get a better deal in a re-sale. Bolton has been hit hard and many of the existing homes are selling at discounted prices. Although I do have lots at The International Golf Club that are going for $199,000 that were $350,000 so there is a significant savings there as well and especially because you'd act as the general contractor.

Good luck!
Sandra
0 votes
Amy Mullen, Agent, Shrewsbury, MA
Tue Nov 22, 2011
Susanna,

That is a common question! Typically a land/build mortgage has more money down but I would shop around. Smaller banks can sometimes offer a lower percentage down but a higher rate.

From a buyer perspective - it's clearly more complicated, a longer process with more decisions. The pay off is that end up with exactly what you wanted!

Amy
0 votes
Richard Shap…, , Framingham, MA
Tue Nov 22, 2011
Andrew Adam's ears should be buring right now.
0 votes
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