I can’t help but try to give some advice to others younger than I, about building or buying a house. There’s so much information out there and a person can get real confused, real fast.But after going through this a few times, and being stressed out beyond my wildest imagination, I sure wish I could help someone else through this process.
I guess, to start off with, not everyone will have as hard a time as I have with this, but then again, you may. Things have really changed, since Dodd-Frank, and the housing collapse of 2008. Banks are extremely picky who they loan money to for houses, and it’s even more of a picky process when you want to get a construction loan.
1. Know ahead of time, that you’re going to need certain information for your application, whether you’re buying or building. Things like recent bank statements, tax returns, pay stubs, 1099's, identification cards, and of course all your debt information. Basically, by the time they collect every financial piece of information you have, they’re going to know everything about you: where you live, where you have lived in the past, what jobs you’ve had, how much money you make and have in savings, what all your assets are, how many kids you have, etc, etc, etc. There’s no way around giving these people your complete information. It can be rather disconcerting, until you build a relationship with your banker. You have no choice but to trust them with your financial information. It’s awful, but you must do it. Be ready.
3. Building a house, and all that goes with it, is about 20 times more stressful than buying a house that’s already built.
7. If you’re buying a house, have it inspected, and also inspect it yourself. Don’t think about offending the seller by looking into every nook and cranny. If they do get offended, I’d suspect they have something to hide, that they don’t want you to find out. By law, all defects are supposed to be disclosed, but not everyone is honest.
a. Be very careful if the house is being sold “as is”. This should be obvious, because you’ll probably be getting into some serious repairs.
b. PROBABLY THE MOST IMPORTANT THING TO HAVE INSPECTED IS GOING TO THE BE THE SEPTIC SYSTEM, if the house has one. (Homes built closer to towns, may have a public water and sewer system.) If you’re out in the country, DEFINITELY, have the septic system inspected, and make sure it’s not going to be something you have to replace, unless you have the money to replace it. Septic systems are now very crazy, all over the US, because the authorities are convinced that septic systems either: contribute to the pollution going into the ocean, or polluting the drinking water, or both. So- this means an incredible expense - for a nitrogen reducing technology, that also requires a five year maintenance contract, after it’s installed.
c. Also, if living in the country, have the drinking water tested. Most places not within a township have a well. Get the well water tested. It’s probably okay, otherwise people wouldn’t be living there, but get it tested anyway. Most county Health Departments will do it for free.
8. If living in the country and you’re building a house, you have to make sure the land will PERC. This is a water drainage test, to see how well the water drains from the pipes from your septic system into the surrounding dirt. Mountainous places don’t have a good history of PERCing. Check to see if a piece of land was PERC’d previously, by asking if the previous owner has anything on file with the county. The office that has those tests on file will be your county’s health department.
In conclusion, buying or building a house is not for the weak-hearted these days. Do your research. You’re going to have to be a fast reader and make decisions quickly at times. Familiarize yourself with the lingo in the real estate and banking markets, so you know what is being talked about. Also, take the time to read through your contracts before you sign them. One thing, among many others, is to see if there is a prepayment penalty, if you pay your loan off early. It’s also a good idea to have a lawyer look over your contract before you sign it. You should never feel pressured to sign a lengthy contract the first time you read it, especially if you are a first time buyer. Be assertive and get what you want. Remember: you are the one who has to pay the mortgage and interest, not the people who are selling you their house or property, or the bank who is loaning you the money.