I know you mentioned "owner financing" but I tend to be leery (both as a buyer and as a seller) of owner-finance deals. Do read the link below. We bought the land for our current dream house about five years in advance of starting to build our house so I learned a few things along the way that might be helpful to you and may suggest another avenue for you to follow. First and foremost, land only loans are notoriously hard to get - even for property within a neighborhood that is already developed in terms of utilities. There just are not that many lending institutions that make land-only loans. Plus, the interest on land-only loans is MUCH higher than on practically every other kind of loan. In 2003, we bought 4 acres in a development that, I suspect, is very similar to the one you're describing. Price was right at $50K for the 4 acres. In 2003 mortgage and construction loans for those with good credit were running around 4.5 to 5%, and we could get a loan to buy a car or even a motorcycle for about 7%. But every place we asked about a land only loan wanted 8.5% or more! I have no clue why this is. It's not like one can abscond with a piece of land, or wreck it in a crash and then refuse to finish paying it off. But that's the way the market is. On an owner finance for a land-only deal, I would not be at all surprised if the seller wanted a percentage point or two above what banks are currently asking for on land only loans. After all, if the seller originally purchased the land by taking a land-only loan and still owes something on that loan, he's going to want to get enough to pay back his own loan plus make something for his trouble. When we decided to buy our new land, we already owned a home and had significant equity in it. So we realized that we could do "equity out" refinance on our first home and use the money to buy our land out-right. Because interest rates had fallen significantly since we'd first purchased our house 18 years previously (a 30 year flat rate), even after paying the fees to refinance, we actually came out ahead. Our monthly payments stayed almost exactly the same (the difference was less than $10/month) and even though we had taken out $50,000 in equity, the total remaining pay-out period only changed from 12 years to 13.5 years. We then started making extra payments each month and actually finished paying off the original mortgage plus the additional $50K loan in just five years more years. So the upshot is that we basically got to "borrow" the $50K to buy our land for free. So, if you already own a home and have equity there, you might look into a home equity loan instead of an expensive land loan or taking the risks associated with an owner-finance deal. The other thing is that, when you are ready to start building, the bank that makes your construction loan is going to insist on having foreclosure rights on the land the house will sit on as well. (That's reasonable since it would be pretty much impossible to foreclose on a house without foreclosing on the land it sits on!) And the bank is NOT going to want to be the junior lien holder on the land. So yes, you will have to finish paying off your land loan either before - or concurrently - with getting your construction loan. Whether a bank will loan you enough to pay off the land AND build the house you want is pretty problematic. Banks now typically will only loan 70% of the value of the finished property (house and land) and they expect the homeowner to put down the other 30%. If you own the land free and clear when you go to borrow construction money, you can claim its value as part of your 30%. If you still owe money on the land, then you are going to have to ask for a bigger loan (so you can pay off the land) and will have less equity to apply to your 30%. The bank that is going to make your construction loan won't care if you pulled some of your equity out of a previously owned house in order to buy the land outright. As long as you own the land free and clear, it's value can count toward the 30% you'll need to put into the new deal. Of course, one of the questions the bank WILL ask in determining how much of a loan you can qualify for, is how much you are currently spending on mortgage payments on unrelated property. But they don't care how much or how little equity you have in the unrelated property because they can't foreclose on that property if you fail to make your payments on the new place. Anyway, it's just an idea. It worked very well for us and might work for you. Here is a link that might be useful: Pros and cons of owner financing for buyers.

It's really none of my business, but when you say the house sold for twice what you paid for, you mean twice what you paid for the house originally, right? Not twice the cost of the house itself plus your real-estate agent's commissions plus the furnace you put in and the paint and carpeting and appliances you replaced and the new lawnmower you needed because the one you had died of old age? That's correct. The price we got was more than twice the original price we paid. But even after subracting the realtor's commission, the hot tub and the fenced yard we added, (and enjoyed over the years), the lawmmower we bought,etc., we still cleared a sizeable amount of money. Which we would not have had we rented for those 14 years. In addition, every year we had a tax deduction for the interest and property taxes. And we would have had to live somewhere. Because the home was new when we purchased it and because DH is very,very good about maintenance, the roof was in great shape, the appliances in excellent working condition (we took the washer/dryer with us and still have them). We busted our chops designing and landscaping it ourselves, but we enjoy gardening, so it was not considered a hardship. We enjoy owning. It's very hard to make an accurate $$ to $$ comparison on the own vs rent question. There are so many variables. And not everyone is cut out for the maintenance that home ownership demands. When I was single, I knew I could not/would not maintain a sgf, so chose to purchase a condo (before marrying DH). I enjoyed many of the aspects of home ownership, but there were also some downsides. There is no "one size fits all" answer. (Thank goodness - as a landlord, I LOVE folks who prefer to rent)

More boring terms/definitions, etc.: POTENTIAL TAX CONSEQUENCES OF A FORECLOSURE FOR THE BORROWER: When a lender forecloses on a home, the IRS treats it as a sale. If the borrower is not personally liable for the debt, such as would be the case for a nonrecourse loan, then the selling price is equal to the price of the cancelled debt. If the borrower is liable for the debt, then the sale price is equal to the canceled debt up to the fair market value (FMV) of the home. If the canceled debt is greater than the FMV, then the difference between the debt and the FMV is treated as ordinary income, for which the lender is required to send a Form 1099-C, Cancellation of Debt (COD), listing the amount of ordinary income. Any unpaid liabilities on the property, such as property taxes, will reduce the FMV of the home and increase the COD. However, if the liabilities are paid by the borrower, then this will increase the FMV and decrease the COD. The lender will also send a Form 1099-A, Acquisition or Abandonment of Secured Property, that will allow the borrower to determine the capital gain or loss from the foreclosure. Taxes must be paid on the capital gain in addition to any ordinary income from the canceled debt that exceeds the FMV of the home in a recourse loan. For a nonrecourse loan, any income is treated as a capital gain equal to the canceled debt minus the adjusted basis of the propertythere is no COD income. However, a capital loss from a foreclosure cannot be deducted. With the recent decline of home prices, many homes are worth less than the amount of money owed on the property, especially for borrowers who took advantage of lax lending standards, and bought with no money down or used inflated home appraisals. Consequently, many homeowners whose homes were foreclosed by the lender may owe a significant amount of taxes.The IRS treats all forgiven debt as ordinary income, even though in the case of foreclosure, the homeowner doesnÂt get to keep the home. If the taxes are not paid for the year the debt was canceled, then the IRS adds penalties and interest to the total tax bill, which can often be tens of thousands of dollars. However, the tax is not owed: ...if the debt is discharged in bankruptcy; ...the debtor is insolvent, with debts greater than assets; ...the fair market value of the home is greater than the canceled debt; ...or the loan was from a friend or relative and the canceled debt is treated as a gift. Any debt canceled by a commercial lender is not considered a gift by the IRS. ...Because the lender has some discretion in valuing a home, it can sometimes be successfully argued that the fair market value of the home was greater than the debt, in which case, no tax on COD is due. TITLE INSURANCE: An insurance policy used to ensure ownership where abstracts are not used. The borrower pays for the lender's policy. They are wise to also cough up another $50, or so, and purchase one for themselves; but the lender does not require it. CLOUD: Doubt, a gap in the chain of ownership. Or, it could be a lien, unpaid taxes, or something else that affects ownership. ENCUMBRANCE: Mortgage, lien, tax, or any restriction on the use of the land...could also be an easement. ABSTRACT OF JUDGMENT: An abstract is a summary (see title abstract). An abstract of judgment is a summary of a judgment. A judgment is the end result of a lawsuit. It shows who won the lawsuit, who lost, how much is owed, what Court made the decisions, the date of the judgment, and the attorney for the winner of the lawsuit. Once the abstract of judgment is recorded (filed with the county clerk or county recorder), it creates a general lien on the judgment debtor's property, including the real estate. An abstract of judgment will be discovered by a title company whenever a landowner tries to sell the land. Most title companies will demand that it be paid off as a condition of insuring the resale. /tricia

@ lana_roma There is a lot of yellow journalism out there. You can do your own research and there have been several peer reviewed publications on yellow journalism. We do know that the number of stories that predict economic decline increase in frequency as the time between economic declines increases. In other words, if we don't have a significant housing decline this year we can guarantee that there will be more stories next year about the impending housing decline. The phenomenon has to do with the psychology of what sells and doesn't, and very little to do with what is right and what isn't. If you find a journalist or blogger who doesn't write articles that predict some calamity, give him some money because he isn't getting paid to write. As to the above - This [real estate] market continues to be driven by the FHA issuing and guaranteeing risky mortgages written by thinly capitalized non-banks There is very little reason to attack the FHA for making risky loans. If anything the opposite is true and FHA loans are predatory. FHA loans are profitable because the MIP (interest rate premium of about .85%) far exceeds the low down payment risk. FHA loans are no more exposed than any other loan. In default the Mortgage insurance kicks in and makes up the shortage of down payment, and the cost of doing this is much less than what is charged to consumers. Our current policies create a questionable base for higher home prices when we consider the low end of the market is driven by Fannie, Freddie, and the FHA all insuring 3.5% down payments from borrowers that often have a weak credit history First - Demand creates the base for higher home prices, to think otherwise is naive. Access to cheaper cash does help increase house prices but not linearly. Cheaper money means that for the same payment (monthly cash outflow) you can get a better house. This often leads to more demand which leads to higher prices. But arguing this is bad is just silly, it is like saying - the price of steak is going up because now more people can afford steak and we didn't anticipate this many people being able to afford steak. Which is exactly his point... Second - Many countries have some institutions that encourage home ownership because home ownership is something we should encourage. While we have taken a financial look in this thread there are many non financial benefits to communities from home ownership. The above programs do exactly what they were meant to do, encourage home ownership.