Sagus and I want to build a home in a few years. Some of my questions include the best way to approach buying land and building a home.

Is it better to buy land, pay it off, then build the home?

Is it better to finance the land and the home at the same time?

Is it better to save for most of the cash needs (say $75,000) borrow the last amount and then build the home?

Or is it more sensible to just get a 30 year loan without saving much except for a down-payment?

Does anyone have any advice or ideas here?

Sher, all I can say is that home financing along with all of the nasty rules and regulations change all the time. You mention that you aren't planning this for a few years. I'd wait until you're closer to building until you invesigate. Been there!

Tree is right. Wait untill you are ready. In the mean time, start checking with banks. They will lay the ground work for you. Also start making that monthly house payment to your "New Home" savings account.

One way to do get your new home is let the bank handle all the finacing for you.

Pick out you property, house planes or have the builder prepair a cost to build your dream home. Be sure at that time it is exactly what you want as any change will really cost you big $$ if made after constuction has started.

Take all this information to the bank and they will tell you how much you would need to put down. As the building expenses occure, the bank will then pay them off. Mean while, you will be making your normal monthly payments. In most cases, property tax does not kick in untill you take occupancy.

While I have made a complicated process sound simple, it may be your best way to go. Bare property is not as valuable as built up property, therefore the amount the bank will loan you won't be as high. Buy lumping everything together, you can get more for your dollar.

Once again like Tree stated, check with your bank and builder at that time as everything changes. Some builders can even handle the financing for you, but like buying a car, he will get a little of the top for handling the financing.

Can you afford to buy land and wait for building a house? That would mean a land payment along with rent/mortgage that you have now.

If you can save, then by all means do so. If you can't then you should seriously consider the loan options.

If it was me I would pay as much as I could right out and make a 30 year loan for the rest. Thus having a lower payment and hopefully not as much interest to pay.

However I plan on building my own home (Straw Bale construction) so the option would be to get land and a trailer, get the well and the septic system - and then start building in my "spare" time. We would live in the temporary trailer until time and money allowed us to finish up the first part of the house.

This way we would go in stages, while still living on that property. Even the house I broke down into 3 sections, the first section being the most expensive since it would have the plumbing (bathrooms and kitchens) and mechanicals.

We have also considered buying land that has a mobil home (septic and well too) already there - as "developed" land it is a little more - but worth it for our plans.

Of course Straw Bale construction is cheaper per square foot, and if I do most of the work - that is a big cut on price - thus we would most likely be able to pay for 75%-80% right out and only make a small loan.

Since we are now looking to buy a house (actually property with two houses) So we can live next door to the parents and take care of them, we may have the option to sell the houses in future (after the parents pass on) - Or rent them out - Which changes the financial aspect a lot. With the housing market out here going up and up, in a few years what we purchase now may very well pay back more than the initial investment.

As renters we do not have that much credit. Once we become home owners we can float bigger loans. This is another step process, we are somewhat "forced" into this since we have the parents to plan for - however it may be something you two could consider if you are just renting right now. Trading up over time can be less expensive than just going for the brass ring all at once some times.

I would suggest that you try to refrain from getting to big of a loan - The less you loan the less interest you will have to pay - which means more money in your pocket in the long run. I would also suggest talking with the bank and seeing what your options are.

Cheers

David