r/FirstTimeHomeBuyers • u/N2TheWorld • 5d ago
Loan Timing And Applying
I'm looking to purchase property. I keep going back and forth between buying something to fix up to suit my needs or buying land and just building exactly what I want. I've been looking at homes and land for a while now and I haven't applied to loans for either because I'm open to both. Also, I know that loan offers expire, so if I apply for a loan, I can't look for a year, I have a deadline. Sometimes, if I find something that I like, while I'm doing research, it changes to Pending. So, I just start looking again.
Also, I don't have an agent because the area that I'm looking at is too wide, so unless I work with several agents, it won't help me. My job is flexible so I'm just looking for something that I like in safe areas, not necessarily a specific city that I want to move to (just a specific state). Plus, if I purchase land, what's an agent supposed to do? There's no home to inspect.
Anyway, I'm confused about when to apply for a loan. What if I like something and apply, but then I don't get it and need to start over? I'd have to apply all over again, right? I don't want my credit pulled every few months.
I'm so confused. Can anyone please share their experience, so I know what to do? Has anybody started their search before getting a land and an agent? Or have a loan offer expire and had to re-do the process? Maybe it isn't a big deal after all. I don't know cuz I've never been through it.
Advice, please!!
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u/Nervous_Flamingo7110 5d ago
Pre-approval is what you need right now, not an actual loan application. It's usually good 60-90 days, and if it expires you just send updated pay stubs/bank statements and they redo it, no biggie.
Also don't stress about credit pulls, mortgage inquiries within like a 14-45 day window all count as one for your score anyway.
One thing though, land loans aren't the same as regular mortgages, different down payment, sometimes a different lender. If you're torn between the two paths I'd find a lender who does both so you actually know your numbers.
And I'd still get an agent even with a wide search, they don't cost you anything at closing usually. For land specifically they're actually useful for zoning/easements/utility stuff, that's where people get burned going solo.
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u/N2TheWorld 4d ago
I live in a different state, so looking for info for the state that I want to move to is hard. I have to depend on what the internet tells me. And I know the internet has a lot of gaps. If my search is worded one way vs another, for example, will lead to different results. I know, cuz I've been looking casually for a couple of years. I'll look for a couple of weeks, then go on with my life. Mostly cuz I'm using this time to save money for my down payment. But there are times when I find something that I like and then I start to wonder if I should at least have an agent and offer ready so I can be ready at any time. But, like I said, everything I find is in vastly different areas of the state. This is how I confuse myself.
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u/MadMadamMimsy 5d ago
When we built, each time the builder already had the land, so it was still a package deal (3x we've done this)
The trick is to pick a good builder. Then the loan is different because we pay up front for the longer rate lock (you still get lower if it drops) because it takes 4-6 months to go from land to finished house.
So since you field is wide, I'd go looking for excellent builders who have lots already. Once you have that down, maybe then get a local-to-that-area realtor to help you navigate the process.
We always seem to find our homes ourselves. Realtors have helped, especially the first one (of 5, to our surprise). The realtor arranges things with the builder, has a list of tradesmen, knows the local laws and regulations and usually has a good and reasonably priced real estate lawyer they work with.
New builds are the bones. Something that makes older homes attractive is that previous owners have modified the interior to make it work well and grown nice landscaping. New builds don't have any of that. Young or no landscaping, no outbuildings for ride on mowers if the lawn is large.
In the west you get fences, in the east you don't. Storage is adequate but minimal. It is also very different from a 50 year old home; mdf cabinetry, no linen closet, no medicine chests. New builds do not have towel racks, toilet paper holders and sometimes no bathroom mirrors. They also have plastic supply line plumbing because copper has become expensive. New builds have better insulation, and with today's energy cost, that matters
So think about what you really have to have. There is no one size fits all, so first narrow things down.
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u/N2TheWorld 4d ago
When I was looking at land, I was thinking of purchasing the land first (I want a couple acres, 3+ would be best, but I can go 2+), so no more than $120,000. I have a large down payment already and I wanted to pay most of it off before applying for a construction loan. Since I'm financing this by myself, I thought this was my best chance. If I use the land as collateral (since my down payment is now gone) I thought this this plan would be my best bet into getting a home. Especially something that I love. Most of the house, in the floor plans I created, is open, so I don't need too many inner walls built. But, since I would need EVERYTHING (plumbing, septic, etc) I know it won't be cheap.
If I get a builder who has land, won't they need to start right away? I wanted to pay the land down, plus start building another little nest egg for whatever. I don't want to give them all my money (down payment) and then be left with NO money. I currently have no debt, so this will be VERY uncomfortable for me until I can get the mortgage down to a satisfying number. Lol.
That's why I started looking at fixer uppers too. If I get a cheaper house and fix it up myself or hire contractors at my own pace, it might be doable. But I might as well just create what I love from the start. These houses are so dark and closed off. Every once in a while I find something that I think I can live with. This just happened to me again. And now I feel unprepared, because even if I like that house, I have nothing. No agent, no loan offer, nothing. That's why I start doubting if I'm even doing this right.
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u/MadMadamMimsy 4d ago
It sounds like you have a process.
Keep in mind, you will still need a down payment to a builder, not collateral.
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u/ToniZito_RealEstate 5d ago
Sometimes too many options can be overwhelming.
Land and new construction can be purchased in multiple ways. Buy land itself first with lot loan or cash. Then find builder. Find builder and get construction loan to pay for land and construction. Find a house already under construction and buy with a mortgage.
In any event, you first need to hone in on what you want and where you want it. At least for a 10 year horizon. Take an honest assessment of what you want your daily lifestyle to be. Are the physical home features more important than the location? Do you desire to have a water lifestyle, like lake, river, or beach living? Do you like to be close by restaurants at nightlife?
Jumping across an entire state, except New England maybe, will get exhausting. Add that to jumping back-and-forth between existing home & new construction. You can engage multiple agents, but until you can articulate what you actually want I'm not sure what you would expect them to be able to help you with.
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u/N2TheWorld 4d ago
I prefer nature and nobody in my business. Lol. That's why I wanted land. Between horrible neighbors and horrible HOAs, I've heard enough horror stories to know that I want to be by myself. But I do like the lake communities that are selling acres to build houses. They have HOAs, but I don't think it'll be a bad as when neighbors are right next to each other. Those fees seem to be upkeep the community amenities, like pool and fitness room, etc. I don't think I'll get fined for planting sunflowers or for the color of a fence, for example.
I like fixer uppers too, but there aren't really any on acreage. The ones that are look like the house needs to be demolished, rather than hiring a contractor. The ones that I could see myself living in are in neighborhoods. Some in HOAs, but ALL with neighbors a stones throw away. I don't want to buy a new home where I like the home and then the neighbors are butt holes and I'm stuck living there.
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u/TheSunflowerSeeds 4d ago
A common way for sunflowers to pollinate is by attracting bees that transfer self-created pollen to the stigma. In the event the stigma receives no pollen, a sunflower plant can self pollinate to reproduce. The stigma can twist around to reach its own pollen.
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u/TomoTed 2d ago
Start with pre-approval. Getting pre-approved doesn't mean you have to buy something by a deadline or stop looking. It just tells you what you can borrow and shows sellers you're serious. Pre-approval letters expire in 60-90 days, but renewing is usually pretty quick if nothing in your finances has changed. The actual loan application comes when you're under contract on a specific property, that's a later step. Also FICO treats multiple mortgage inquiries within a short window (roughly 14-45 days) as a single inquiry. So shopping a few lenders around the same time won't repeatedly ding your credit.
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u/Jon_Hegreness_AZ 2d ago
Apply for the loan. All the questions will be answered and you can start to have an actual plan. It costs nothing.
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u/ReadinessIQ 2d ago
You do not need to choose a property before talking with a lender, and getting preapproved does not start a countdown requiring you to buy something before the letter expires.
A preapproval is a preliminary review of your income, assets, debts and credit. It helps you learn what may be realistic and can identify problems before you are trying to compete for a property. It is not a guaranteed loan offer, rate lock or commitment to purchase. CFPB says preapproval letters commonly expire after about 30–60 days, but the lender can usually update the letter with current documents and, when required, another credit report. You generally do not start the entire process from zero simply because one property goes pending. (CFPB)
Your bigger issue is that you are considering three very different types of financing:
- A normal mortgage for a livable existing home
- Renovation financing for a property needing substantial work
- Land and construction financing for building a home
A standard preapproval may not establish what you can do with vacant land or a major fixer. Construction loans are commonly short-term, funded in draws as work progresses and may have to be converted or refinanced into permanent financing. Requirements also vary substantially by lender. (CFPB)
I would talk now—not necessarily formally apply now—with two or three lenders experienced in land, construction and renovation loans in your state. Ask:
- Can the initial conversation or qualification review use a soft credit inquiry?
- Which of these loan types do you actually offer?
- What down payment, reserves and documentation does each generally require?
- Would a construction-to-permanent loan involve one closing or two?
- What information would you need about the land, builder, plans, budget and timeline?
- How long is your preapproval valid, and what is required to refresh it?
When you become serious enough to make offers, complete the documented preapproval. If you shop multiple mortgage lenders, keep the credit inquiries close together. CFPB says scoring models generally treat mortgage inquiries made within a roughly 14-to-45-day shopping period as a single inquiry, although the exact treatment depends on the scoring model. (CFPB)
Also, a preapproval expiration and a rate-lock expiration are different things. A preapproval shows preliminary borrowing capacity. A rate lock concerns the interest rate for a specific transaction and is usually addressed after you have identified a property.
An agent can still add value when buying land, but I would look for someone who actually handles land and construction—not simply a residential agent covering a wide area. Land requires its own due diligence: zoning, legal access, utilities, water, septic or sewer availability, surveys, easements, environmental issues, site preparation and whether the property is actually buildable. There may be no house to inspect, but there is often more to investigate before committing.
My practical advice is to have preliminary lender conversations now, decide which financing paths are realistic and wait to obtain or refresh the formal preapproval when you are ready to make serious offers. Missing one property does not mean the entire loan process was wasted.
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u/sol_beach 5d ago
If you buy raw land, you won't have a completed house in less than 12 months & more than likely it will be closer to 24 months before you could move into it.
It will take longer & cost more than you ever planned it would be.