Where to Build Your Home

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1. How do I know where I should build my home?
2. What is a "finished lot"?
3. Can't I buy a piece of land that's not a finished lot and save some money?
4. What do you mean by "planned community?
5. Can tax bases differ within the same community?
6. Issues to consider in selecting the actual site
7. I've found the perfect location, but I'm not ready to build my dream home. Can I obtain financing for the land only?

How do I know where I should build my home?

Location may be one of the most important factors to consider. Although many people have a geographic location in mind, some are open to alternatives. It's important to consider your lifestyle (and those you'll be living with) as well as the cost. If you're planning a family, schools will be important. If not, you may want to consider other factors such as proximity to work, or accessibility to the beach, the mountains or leisure activities.

Once you've selected an area, you'll need to select a lot for your future home. There are real estate agents who specialize in "finished" lots as well as individuals and companies that sell individual finished lots.

What is a "finished lot"?

A "finished lot" refers to a portion of land that already has road access and utilities in place to the lot boundary. Additionally, it has been approved by the city or county as a separate parcel of land on a parcel map.

Can't I buy a piece of land that's not a finished lot and save some money?

That's a good question. While it may be possible to purchase an unfinished lot, generally this is not advisable for the individual building his or her own home because the costs of bringing roads and utilities to the first lot in a new area are usually very high. Typically, the first person to build pays for others who will build later. There are land developers who specialize in preparing lots for building (this may include zoning and/or soils issues, as well as bringing roads and utilities to the site, and creating a building pad). Often, these lots are in a planned community.

What do you mean by "planned community"?Aren't all communities planned?
No, many older communities were not planned; they evolved. Certainly, as a city has grown, plans have taken shape. But in many cases the nucleus of a community was started many years before community or city planning existed. In many instances, it is this unplanned characteristic that gives a community its charm.

A planned community, in contrast, generally offers a specific style and certain amenities at a package price. Depending on the size and location of the community, these amenities may include greenbelts, landscaping, biking trails, swimming pools, even schools and shopping centers. Some amenities, such as the community pool and greenbelts, are paid for through a homeowners' association. Others are paid for through taxes. Still others are design enhancements intended to encourage potential buyers to purchase in an area or to attract more commercial business.

Many of the more costly amenities included in a planned community may not be affordable for a homeowner on an individual basis. However, some of these amenities may not be important to you. After all, priorities, like lifestyles, vary. If you select a home in a planned community, you'll generally have a more structured community where decisions are made jointly rather than by the individual homeowner. These community decisions include individual home design and landscaping. While some homeowners may consider this an acceptable trade-off to ensure an attractive environment, others may consider it an infringement on their rights. It's important that you know how you feel before selecting the type of lot you want.

Can tax bases differ within the same community?

Yes, this is a good point. While some cities already have parks, schools, and streets, newer communities built within the same city may have special assessments (or "piggy-back" assessments) that cover the costs to develop or maintain new or existing parks, schools, streets, etc. These assessments may be for a prescribed period of time or may continue indefinitely. A little research goes a long way. Here again, a good real estate agent or title company officer can often provide you with this information.

I've selected my community. Besides the view and whether or not I want to be on a corner or cul-de-sac, what other issues should I consider in selecting the actual size?

Once you've selected your community, you'll want to look around at the available finished lots. Buildability is important. Generally, you will want a parcel that has a buildable pad in an area where the soil is uncontaminated and where the city or county will be willing to issue a permit to build the size and type of home you want. In regard to soils and contamination, keep in mind that getting a "good deal" on a site that was previously used for a gas station or a dump may not be a good deal. If you're building in a new area or in an area that was previously used as commercial property, you may need to consult with a soils engineer to test the soil for toxic conditions.

Again, an experienced real estate agent or title company officer may be able to assist you in determining the history of your property and the necessity of doing a soils study. If the property is in a new community, the seller may already possess a full report on the site.

Another consideration is the slope (grade level) of the property.

While a property on a hillside may offer a great view, it may also require more extensive foundation and structural work to make it buildable than would a flat parcel across the street. Consequently, while the property may appraise at a higher value, the cost of building on it is usually higher as well.

Finally, the size of the lot is something only you can decide. Certainly you'll want it to be large enough to accommodate your dream home. However, you should also consider whether you plan to spend a little or a lot of time or money on the yard. If you hate yard work and don't want to pay a gardener, you should consider that before selecting an oversized lot. On the other hand, if you're a weekend horticulturist, you may want a property large enough for a vegetable or flower garden.

I've found the perfect location, but I'm not ready to build my dream home. Can I obtain financing for the land only?

Yes, you can obtain a Lot Loan. Typically, this is short-term financing for the purchase of a residential lot suited for future construction. This loan allows you time to select an architect, builder and design your dream home. Our Lot Loan program allows you to finance up to 50 acres. And when you're ready to build, we offer "The ULTIMATE" one-time close Construction-to-Permanent Loan.

 

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