How do normal people pay for custom homes on land?
May 30, 2009 4:27 PM Subscribe
Dream Home Filter: How does one go about financing the buying of land and building of a custom house? I need help with land loans vs. buying land with a house on it (to improve/tear down), construction loans vs. home loans, etc
posted by mathowie to Home & Garden (9 answers total) 14 users marked this as a favorite
I've always wanted a couple acres of land and a custom designed house with a kitchen that works exactly as my family wants it to, etc, but I've never known anyone that did it directly (I know a few people that came into money and paid cash for new custom homes).
I understand from a bit of research that you could get a loan for the land you buy, then a construction loan to build a house, and when it is complete, it can be rolled over into a standard home loan, but I've heard the land loans are hard to get and the construction loans are high interest rates. I've been told by some people that buying land outright is the only way to go, but I don't have a few spare 100s of thousands of dollars to do that.
Let's say I currently live in a home worth $300k, and I'd like to someday build my own $200k custom home on $100k of land (keeping my current house until the new one is done, then putting it on the market). Are the loans necessary to buy land and build a house tough to get with a lot of interest? Is buying land with a manufactured home on it that could be removed be a better way to go?