Question for those who have purchased land

[sju]

If you don't mind sharing, what was your experience with banks if you decided to finance? I read getting a loan for just land is difficult.   I have purchased two homes and the first one was new construction. The builder owned the lot in the subdivision so I did not need to buy land or worry about a construction loan. We are now strongly considering buying 1-2 acres to build a new house in a few years.  We would be looking in subdivisions and not unincorporated/unimproved areas.  We are ok with septic tanks but not with wells. We have not talked to banks or realtors directly but I thought I would ask for input here. 

[emjacobs]

Can I ask why you aren't ok with a well? We bought our land (2 acres) and built on it but I'm not any help because we didn't Finance.

[sjh722]

I have no problem with a well. What is your concern? You can have the water tested (which we have) to make sure nothing is amiss. If it goes out, a new well is much cheaper than a new septic. Plus, no water bill.

We didn't have trouble financing our land but we did have to put at least 25% down. We went through Farm Credit (even though our property is totally wooded). They can lend in a lot of areas even if you're not "farm property". Otherwise, most people I know who have financed have gone through a local bank or credit union. I think 20%- 25% down minimum is standard.

[boiler717]

All of the loans we looked at required at least 20% down. Maybe one we could do for 10% but that was at Wells Fargo and they required you to be a member for a year before the purchase.

I would also look into the construction loan process so you are aware of what will be required for the amount down and payments while building your home.

[boiler717]

Oh, and for subdivisions they may require even more down and construction to begin within X amount of time (I think 24 months was standard). There is typically a higher chance of the property losing value over time so they want to mitigate that with a larger DP and quicker construction. The neighborhood may have been the ones that required the construction date though.

[tripleshot]

We bough 1/3 acre in a subdivision about 8 months before we built. Huntington did a land loan with 20% down, 5 year ARM. we rolled the balance into our construction loan in April (30 yr fixed) with a different bank.

[sju]

Thanks so much for all the responses. We have not had actual experience with wells so maybe it can be more of a fear of the unknown but several friends have wells and they have run into problems of not having water, equipment breaking at different times. With city or co-op utilities we would not have to worry about that. Anyway the areas with wells are farther away.

DH and I definitely have a lot to consider. We bought this house almost at the peak of the market so any real estate decision makes me nervous. Thanks again!