Why buying land to build a home is a great idea?
Whether you want to reap the benefits of thriving property market or looking for a retirement home to settle down, buying land is the ideal choice when it comes to the property transactions. The real estate market is growing at a rapid pace and the property values have been steadily going up in the recent times, making land buying a top investment choice.
Steps to pick the right property at right location
If you are considering buying land, here is your guide and steps to follow during the process-
- Searching and short-listing of the property
The golden rule of any investment is thorough market research. Begin by checking the local realtor sites, property listings, speaking to a renowned real estate agency, and exploring the various parts you’ve shortlisted for investing.
- Finalize the property
Real estate market offers multiple options to the investors for land buying. To make the choice easier, consider the essentials such as budget, cost of living, weather, culture assimilation, or any other specific preferences you have.
- Make the offer and negotiate
After deciding on the ideal land, make the offer and try to negotiate the price to come to a mutually agreeable price to both the parties
- Read and sign the purchase agreement
Make sure that the purchase agreement is made by a certified lawyer. Once both you and seller accept the conditions of the purchase agreement sign the agreement and seal the deal.
- Transfer of title and deal completion
Once the agreement is signed, all you need to wait for the title to be transferred in your name, which generally happens within 30-60 days. This will complete your deal of owning your little paradise.
Ways to finance your land purchase
If you’ve been wondering about the ways to finance your land purchase, here we are discussing all you need to know about the land purchase financing and the options available to you. First and foremost, it is important to understand that the usual route for land financing loans will require a 20% down payment. If, however, you want to secure easy financing using other methods, the following options are available
Conventional fixed-rate loans
This is the best option for anyone who plans to buy land to build a home from a long time perspective, have an established credit history, and can put the upfront down payment amount. Some of the benefits of the conventional fixed-rate loans are discussed below-
- This type of the Home Loan offers the lowest fixed rates for the eligible land/home buyers
- It is a very transparent product with no interest-rate surprises as such for the customers
Seller financing is the easiest and convenient way to buy a land for sale with no credit checks and other formalities. When buying the land from a seller, the option of seller financing allows you to pay directly to the seller instead of paying the amount to a lender. In simpler words, the seller takes the lenders place in the seller financing option.
The advantages of seller financing include-
- Easy loan without any hassle
- Option of making monthly payments to the seller
- A short repayment period, post which you need to pay the remaining balance which is left on the loan in one go
Cash Purchase Option
Having enough cash to purchase land in one go is another great option to finance your land investment. Although it is not usual practice for most buyers, it’s a great option that the investors can consider. Managing small loans from friends and family members to make the cash payment for the land deal will save a lot of money in the form of interest and allow you to purchase land for a great discount as well.
The advantages of cash purchase include-
- The convenience of negotiation for lower sale prices from sellers
- Availability of various options to manage cash such as from tax rebates, selling a used vehicle, bonuses etc.
It is a decent option for anyone with an established history and the capacity to pay 5% of down payment of the total amount. Some of the benefits of the Adjustable-rate Mortgages are discussed below-
- The product offers initial lower monthly payments that gradually increases with time
- Offers the lowest short-term rates to the prospective homebuyers
- Another benefit of the ARMs is the initial rate periods of 3-10 years, post which the rates can adjust up or down
New Construction Loans
It is an ideal option for someone looking to build a new home to your specifications or want to buy a lot for a future home. Some of the benefits of the new construction loans are discussed below-
- Availability of convenient financing for new construction
- The product offers construction-to-permanent loan options to the prospective investors