Country Minute: Home Site and Construction Loan Timing
Miranda Kelle, Financial Services Officer
GreenStone Country Minute


Should you buy the land and build right away, or would it be better to buy land now and wait to build? In financing terms, you’re asking which kind of loan you need – a home site vs. a construction loan. What do you need to know?


First, let’s look at the specifics of what they are:


A home site loan is a loan on vacant land, or a vacant lot. At GreenStone, we have flexible financing to fit your needs, regardless of the parcel size. Vacant land loans have no acreage restrictions, and you don’t have a building timeline – when you’re ready, we’re ready.


A home construction loan with GreenStone can be used for a do-it-yourself or contracted construction. Home construction loans can include variable or fixed rates, and offers interest-only payments during construction. Even if it’s a new purchase or previously-owned property, we can roll in your land loan into a construction loan.


Next, when deciding between which path is right for you, it helps to consider three factors:

  • Timing of building – What makes the best financial sense for you
  • Budget - How and when do you have access to funds
  • Market condition – Economic trends and conditions


There are some pros for combining the site purchase and home construction all in one loan, and that’s the savings on fees and closing costs. That is, instead of paying the required fees and costs for two loan closings, you’re just paying for one.


However, the cons may outweigh the pros. For instance, to combine your land purchase and construction loans together, everything has to be ready to go at once. That means all the plans for building, all the costs on the sworn statement, and readiness to break ground has to be prepared. Since this is a very deliberate process, it may not want to be something you will want to put together quickly. If you are ready to make an offer on the land, but you don’t have details organized quite yet for the build, it might be beneficial to take the time to plan and do two separate closings. Plus, there’s no time restriction for the time between loans, so you can feel free to take whatever time you want – or need – to plan your build.


Another factor to consider is that the more land sits, the more it usually appreciates in value. If you delay construction, your land may be worth even more. For instance, if you give land time to grow in value, you can use the added value as equity, which could then be used as collateral for the loan.


Whether you buy the home site and start building all at the same time, or you wait to build later, you’re going to get the same result – a home just like you want, right where you want to be. We’re happy to help you along the way.


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