Month: May 2013

Whether you are planning on purchasing land to build a home now, or whether you want to hold it to build on later, there are a few things that you should know.

You can purchase two types of land – improved and unimproved.

Improved land has utilities such as water, electricity and sewers already on the property, so that they’re ready for you to hook up.

In unimproved land, these utilities are not available. Depending on what you want to build, this may make a difference. Lenders are more hesitant to lend money for unimproved land, as they see it as a more risky venture than improved land.

This is why down payments on unimproved land are so much higher; improved land, on the other hand, will have a lower down payment, as it can be resold more easily should a borrower decide to walk away from it after receiving financing.

There are fewer financing options if you purchase vacant land than if you were going to purchase a pre-built home.

As mentioned previously, down payments are more: typically, you may be putting down 20 percent or more, which is higher than the typical 3.5-10 percent you likely would put down on an existing home.

Lenders will offer both fixed- and variable-rate mortgages, including home equity loans, but usually with terms of 10 to 15 years as opposed to 30-year loans for a mortgage on an existing home.

For more information on mortgages for vacant properties, contact your mortgage professional.

Purchasing a home is likely to be one of the most significant investments you make in your entire lifetime, especially if you’re doing it for the first time.

Although there are many safeguards in place to protect you as you go through the process, your own common sense will serve you better than anything else.

Here are a few common sense things to watch for to help you become an informed home buyer:

Know what’s right for you.

If, for example, you plan on calling your new property home for at least 20 years, a fixed rate mortgage could make sense. However, everyone is recommending you get an adjustable rate mortgage because of its current low rate. What to do? Use common sense: Step back and think about whether this the right way for you (not others) to go.

Ask questions and expect answers.

If you don’t understand something that has been said, ask for clarification until you do. It’s your right to ask questions and you should expect a quick, polite and informative response.

Manage your expectations.

Just because you may be able to afford a larger home or a higher mortgage amount, doesn’t mean a big home or high mortgage is in your best interest.

Sit down with your mortgage professional before you begin your home search, so you know what to expect in terms of monthly payments. Use your common sense and your mortgage professional’s advice.

Use a real estate attorney.

Don’t consider purchasing your home without a real estate attorney.

While you may be tempted to save on legal fees, a good real estate lawyer is worth his or her weight in gold.

And note that your lawyer charges the same amount, regardless of the sale price of your new home or the mortgage amount.