Estimated read time: 5-6 minutes
Real estate is a consistently evolving market. What worked for buyers ten or twenty years ago may not apply today. However, one constant has remained throughout the history of home-buying — a common pursuit for value.
For many, the allure of building a home stems from this desire. It provides people with an opportunity to tailor their home to their lifestyle, and ensure that they can make the most of their investment. That said, before engaging in this process, prospective new owners should consider answers to a variety of questions, specifically where to build.
Utah is a state with several beautiful landscapes and environments. Whether you're looking to create your home on the top of a hill or in a warmer climate, here are four do's and don'ts for buying a lot:
Do: Consider building on an improved lot
There's nothing like already having work done to speed up the construction process. Known as an improved lot, these are spaces that have already been prepared for building — making them valuable for prospective owners.
While these lots can provide builders with opportunities, there are a few things buyers should look into before signing an agreement. For example, some of these lots may be restricted by Home Owner Association requirements, which can dictate the project timeline as well as the maintenance needs for when the lot is vacant.
It's also worth considering financing options before purchasing an improved lot. At Goldenwest Credit Union, APR's for lot loans start at 5.55% for a 30-year term with a one-year balloon. The minimum required down payment is 20%.
"What we love about helping members acquire improved lots is that they're building on quality land," said Tonya Froerer, a senior vice president at Goldenwest Credit Union. "These can be great options both personally and financially for many individuals, and bring people one-step closer to owning a great home."
Don't: Neglect the implications of building in a certain environment
Not all projects are billed equally by contractors. Some plots of land are more difficult to build on than others, potentially resulting in higher costs and longer build times.
Typically, excavations are required for developing hillside lots, as well as for unique retaining structures to be constructed. Homes near bodies of water or flood plains, on the other hand, may need to be elevated or use specialized foundations. Gaining access to utilities on remote lots can also prove challenging.
For those whose next home may reside on a difficult plot to build on, it's worth receiving multiple bids on a project. Builders may also be able to cut costs with their lot loan option. At Goldenwest Credit Union, for example, one-half of a lot loan origination fee can be credited towards a Goldenwest construction loan.
Do: Contact your agent about insurance requirements for your new home
In most cases, building on an improved lot will not require an owner to purchase additional insurance, as the liability limits from their existing home or renter policy should cover their new property.
To ensure future needs are met, it's wise for an individual to verify with an insurance agent that their homeowner or renter's policy can adequately provide coverage for their assets.
With that said, the geographical location of a lot could impact a future homeowner's insurance policy. For example, if there is a likelihood of flooding in an area, a builder may need to purchase a flood insurance policy.
"One of the many benefits of purchasing an insurance policy through Goldenwest is that our agents live in the local area," said Mark Turner, president of Goldenwest Insurance Services. "We can visit your lot, or home to help you make an informed decision on the coverages you need to protect your assets."
Though in separate divisions, Goldenwest's credit union and insurance operations are connected together, allowing the company to provide members with access to a variety of specialists at once to craft solutions.
"At Goldenwest, our mortgage experts and insurance professionals are in close communication with each other," Turner said. "This collaboration allows us to expedite a quote with coverage that satisfies your loan requirements as well as provides appropriate asset protection."
Don't: disregard future development plans
The ordinances of every city and county are different. While a neighborhood may be great, certain restrictions could potentially stop a homeowner from making a key addition to their property.
It's important to build a home that can accommodate a builder's potential needs. That said, it's also wise to consider that needs change. When finding a lot for development, future residents should familiarize themselves with code related to items such rear-yard setback requirements.
Finally
While there are several decisions a homebuilder should make before starting a project, one of the most important involves choosing who to work with. Individuals constructing a home should find a contractor that understands their vision, as well as a financial institution that can make their dream a reality. Goldenwest Credit Union's 5.55% lot loans are available now for a limited time.
"Being successful in real estate takes timing things effectively," said Froerer. "It's rare to get a lot loan rate as low as 5.55% in today's market, and will likely be moving forward as well. If this is something that someone is even considering, they should think about a consultation."
Visit the link to learn more about Goldenwest Credit Union's dirt cheap lot loans.
