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Can you buy a lot, and then build a house on it later?

My fiance and I are looking at houses on a somewhat tight budget.  I am currently working part time and I should make full time in about 6 months to a year.  My thought was to buy a lot now with a mortgage, and then after making full time, get a loan for 100-150k and build a house.  To me it seems like this should be easy, but I'm yet to find good information online.
  • October 15 2013 - US
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Answers (3)

Best Answer

Profile picture for CallTheSisters
In theory it sounds like a plan.  Your estimate for construction may be low depending on what part of the country you live in.

If the lot is not serviced by city water and sewer you could be looking at up to 20K for a well and septic.  If the lot needs a septic system you have to be sure it has a current perc test.  Don't buy a lot on impulse.

Find a local Real estate agent who would be willing to sit down with you and help you compare new construction costs to existing home prices.

Usually construction loans require more of a down payment then an already built house.  There are lots of hidden fees and costs associated with building.
  • October 15 2013
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You will need to speak with a lender who loans on vacant lots. It's a more expensive loan package and you would not want to carry it for that long. Loans on just vacant land can be difficult to find these days (although not impossible) and they too are more expensive.
Sit down with a good lender and look at all of your alternatives.

Good Luck,

Tesa Noonan, REALTOR

  • October 15 2013
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Yes, you will best served going with a local bank for your lot loan.
  • October 15 2013
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