What Are My North Carolina Land & Construction Financing Options?
Land or Lot Loan
A land loan may be a good option if you've found that perfect piece of North Carolina land but aren't quite ready to build your home. This land loan program allows you to purchase your North Carolina land and then pick your builder when the time is right. At that point, you can then look into a construction loan, or paying for the construction outright.
Land loans can be difficult to obtain in the Charlotte, NC area - as is the case nationwide - and lenders may treat your loan differently depending on the type of property you want to purchase and what you plan to do with the property. Some Sellers will also offer Seller Financing in North Carolina, which often provides buyers with easier qualification and repayment terms than a traditional mortgage. American Land Corporation, for example, offers Seller Financing on its properties available in and around the Charlotte, NC area (currently offering land purchase options on Rowan County Land, Cabarrus County Land, Iredell County Land and Lincoln County Land).
Once you’ve acquired your Mecklenburg area land, finalized your home design (and also made sure it complies with North Carolina, Federal and Municipal codes and requirements), found a builder and are ready to get started building your new home, a construction loan is your most likely choice. Construction loans are short-term loans designed to help fund the overall construction costs, and the funds are dispersed periodically as needed to pay for materials, manpower, fees, services, etc.
These loans are initially used for disbursements made to cover the cost to build, and interest is typically paid only on the outstanding balance. Once construction on your North Carolina home is complete, it converts to a permanent mortgage, at which point scheduled monthly payments of principle and interest plus escrows, (if applicable) will go into effect.
The Bottom Line...
Securing financing for your NC land purchase and your Charlotte Area new home construction might be a bit more complex than a traditional home mortgage, but don't be discouraged! Talk to others who've gone down this path to see who they used for financing, and learn from their experience so you don't end up with too many 'X Factors' in the process.
Of course, you'll want to get the lowest possible interest rate and the most affordable monthly payment for your North Carolina property. Also, don’t forget the other expenses like property taxes and any maintenance, such as mowing, HOA/POA fees, etc.
Buying and owning land can be a very rewarding experience, even if you don’t build on it right away. Your little piece of heaven might just turn into a profitable investment, a cherished home, an enjoyable vacation spot, or even a successful business!