How to buy a lot for a new home

[HVACTexas]

Talked to a banker and he said if I buy the lot he will give me a 12 month loan to build a new house. I plan on selling it to the public, not for me to live in. Is this the standard method?

[Rich]

Of course they would say that - construction loans are typically a little higher interest rate to begin with.. the banker uses the land as collateral to secure the loan.. they have no risk. Expect to pay 20% down on the loan.
Ok I was ranting :) But yes spec homes are typically done that way.

[Cole]

Exactly done that way.

[Zatol]

With my spec homes it works as follows;

I submit plans with specifications and lot location to the bank. They send it out to an appraiser, (that I pay for).... I am then granted a loan of 80% of the appraised finished value.

My loan is a construction, interest only, loan... It is for the lot acquisition and for the construction costs. My rates are not too bad. I pay Prime + 1%.

I have only dealt with BB&T. I don't know if they are in your area, but they are really great to work with...

[barrydalive1]

I will try that as well. I need a construction loan and I want to keep my rates down.

[Raynar]

Without the benefit of 20/20 hindsight, no one can tell you when it’s the absolute best time to buy. But if you make a real effort to shop around and get a feel for the market, you can almost certainly increase your chances of getting a house at a price you can be happy with now and in the future.

[Tomn]

Where are you looking to build?