Land and construction loans: how does this work?
If we were to purchase a lot using owner financing and a few years down the road (while the lot is still being owner financed) we decide we want to build on it, how would that work? Would the lender issuing the construction loan essentially refinance the lot?
I ask because we have decided on a specific neighborhood we want to build in. Previously we were looking at totally undeveloped lots in a more rural area, but recently we fell in love with an estate lot sort of neighborhood with large homes on 2-5 acres. The neighborhood is mostly built out, but there are a few lots left. One of which is offering owner financing.
Also, if we decide to wait and not opt for owner financing, is it any easier to get a land loan on a neighborhood sort of lot that is more developed in terms of utilities and critical areas/wet lands?