8 financial tips for buying land for your homestead
Lending rules are different for unimproved land versus land with a house on it: If you are trying to take a mortgage to buy a land, you will likely need a lender that specializes in land purchase. Many banks may not allow lending for raw land or unimproved land over 2-5 acres. This may vary from location to location, so don’t forget to make sure to check with the banks and lenders first.
If you get a mortgage for your land, your down payment will be higher: It basically depends upon the risk taken by the lender on your land purchase. If you are purchasing any house then the down payment will be as low as 0%, whereas in buying the land the down payment will be anywhere around 10 to 50% of the purchase price.
Land sometimes comes with baggage: Raw land can sometimes come with interesting issues that may require resolution before purchasing. There can be many issues like mineral rights having been sold by the previous owner. We can merely resolve this issue easily but it can ruin the entire purchase. There are several other issues which may include, deed restrictions, outstanding liens, mineral and water rights.
Draft a hypothetical future budget based on the potential cost of living for each parcel: The expenses you are likely to have for each parcel you are interested in is depend upon draft hypothetical future budget. Before purchasing a land make sure of the other costs which may include fuel cost is you are buying a property in a remote location, utilities like cost of solar, gas for generators, water, and internet.
Make sure you look at the property taxes for each piece of land too: This creates a big impact on your budget. Check with your local property valuation administrator for the taxes of the land.
Determine your living arrangements for after your land purchase and work it into your budget: If you have purchased the land but you haven’t started the work to build the house, you need to carry out the expenses while living in a temporary house, living with your friends or family, renting an apartment or house. You have to figure out the monthly cost for staying.
Protect Yourself: Before you purchase any land, make sure the price is keeping with the normal costs in the area. Keep in mind that when you put down earnest money, you will be allowed to make the final purchase dependent upon the written contingencies.
Evaluate how much it cost to develop your land and how much you can really do it yourself: You have to evaluate the cost from your budget before developing your land. It might look easy from a distance to manage your cost but it might get difficult to build a building or repairing realistically.
If you are interested to buy a land, you can contact us in our facebook page:
https://www.facebook.com/Texas-Home-and-Land-Buyers-LLC-105275077681729/?ref=aymt_homepage_panel&eid=ARBNnjvzISbGbjiTBsHT-bySGDYcM9jxcfgqwohbuQyTpuew8BHMnZkaeiTc6xCxHHzUz3rjJdl9gHm4
