Pay off land or build cabin from sale of house?

oldmcdonaldsfarm · #1 09/17/08, 09:54 AM

We have decided that we are going to move out to our property sooner rather than later and don't know what to do with the proceeds that we get from the sale of our house.
We would love to get enough to pay off the land AND build a cabin/small house but we don't think we can do both with the market the way it is.

If we only get enough to do one or the other, which is better?

Pay off the land? Or get the cabin built?

chewie · #2 09/17/08, 09:58 AM

well, that depends on alot of things...can you earn a living on the farm? if you don't build, what will you live in?? can you live in something somewhat 'makeshift', pay off land, then build in a coupla years?

and for the sale of your house, be careful, that could take much longer than you plan for, so do you have a plan longterm for all this??

i envy you as we are still not moved, and things in our rental are rather uncomfortable. but we too aren't sure how to build/move/pay off. big things to consider!

Rondah · #3 09/17/08, 10:00 AM

I say pay off the land, without question. If you have to, live in a trailer until you have enough money to build a cabin

Good for you, this is so exciting. Best of luck, and I hope you post pics of the land when you move

Common Tator · #4 09/17/08, 10:13 AM

I would pay off the land, and check www.craigslist.org for a free or cheap mobile home. You can advertise for what you want there too! With the mobile home on your property, you could be living debt free.

If you are happy with that living arrangement, great! If not, you still have a place to live while you save and pay as you go to build the house you want. Then you can either sell the mobile home, or keep it as a guest house or rental.

country friend · #5 09/17/08, 10:24 AM

PAY OFF Land. Indiana Country Friend Jack

wy_white_wolf · #6 09/17/08, 10:49 AM

Pay off the land. Set aside the money that would have went out in payments to pay as you build on the cabin.

The Paw · #7 09/17/08, 11:39 AM

Build the cabin, and use any remaining balance to pay down the principal on the land mortgage.

That way, you can live in the cabin and have a choice between accelerating your mortgage paydown, or keeping the payment small with little strain on cashflow. Properly built, the cabin will be an improvement to the land, and increase value somewhat.

I think buying temporary housing while you save is not only wasted money, but it is a lower quality of life. I don't see the point to scraping by for a number of years so you can finally build on debt-free land. Being debt free is great, but life has no guarantees. You could drop dead before the big payoff. Life is for living, and debt is a tool that can be useful if it is managed properly.

Honorine · #8 09/17/08, 11:52 AM

I'm with the pay off the land crowd, live in a trailor and go from there, the economy is in the dumpster, no guarantees that it will get better any time soon. We bought our place outright as a fixer-upper, took almost a year of work before we could move in, and its an ongoing project everyday. My DH always wants to take out a loan to finish the renovations, I've fought him tooth and nail. I'd rather live in a shack that belongs to me than a mansion that the bank owns, JMHO

Razorback21 · #9 09/17/08, 02:46 PM

We made the decision to pay off our place and I based it on the ability to sleep sound at night!!!!! Being debt free is the type of freedom we have longed for. I would love to down home again, but if I can't live where I want, I can at least live how I want. You have to decide how important that freedom(debt free) is for you. Good luck with your decision.

flaswampratt · #10 09/17/08, 03:35 PM

PAY OFF THE LAND!!!!!!

We were able to get 100% out of debt last year, and I swear, after we paid the mortgage off it took a few months for it to sink into my head we had accomplished what seemed like the impossible--DEBT FREE!! Thankyou God!!

The releif from that stress is such an unloading of a burden upon your shoulders, and, being debt free actually will give you and your family other options.

Just do it!!

<///><

watcher · #11 09/17/08, 03:51 PM

Buy the land, buy the land BUY THE LAND. If things really go belly up you can always live in a tent.

agmantoo · #12 09/17/08, 04:25 PM

You already have theland the price is not going to increase. Obviously you already have some type of payment plan with the land and the administrative fees have been paid. Nothing is going to change with the land. Now about the home. Today a person with money is in the envious position and can bargain for services and materials while the building business is in the basement. You will get more for your money now by building the home. You will not have to jump through hoops to appease a lender nor will you have high loan origination fees.
What conclusion does that draw for you? Enjoy the new home :=)

terrythetaod · #13 09/17/08, 07:30 PM

I don't think it matters much either way. If you use the money to build a cabin, and then you couldn't make your land payments, you could lose both.

If you pay off the land loan, then borrow to build a cabin, the land will be part of the mortgage agreement with the bank. Again, if you can't make payments, you could lose both.

(However, owning your land is instant equity and makes getting a loan easier.)

I would lean towards using the money to build the house - as others have said - with building starts WAY down, you can probably cut some good deals.

Rockin'B · #14 09/17/08, 07:48 PM

Not enough info...

Will you maintain employment in a fashion similar to now?

What is the interest rate on the land?

How large is the loan? Do you still have a long time left on the term?

How old are you? Near retirement age?

If you were still going to be employed and the interest rate isn't punitive, I'd buy the home and carry the small note on the land. If the interest rate is high, you may be able to build the home and refinance the whole package at a much better rate and still write a short term load such as a 15 year mtg. Home loans are generally at a better rate than raw land.
That would be especially workable if you were fairly young yet.

Freeholder · #15 09/17/08, 07:59 PM

Quote:

Originally Posted by watcher

Buy the land, buy the land BUY THE LAND. If things really go belly up you can always live in a tent.

+1000

With the way the economy is headed, the worst thing in the world is having debt. Get debt-free, and apply the money you would have been paying out on the land to building your cabin. Live in a tent, or a cardboard box if you have to! (Hopefully you can manage a travel trailer, though.)

Kathleen

tamilee · #16 09/17/08, 08:04 PM

Quote:

Originally Posted by oldmcdonaldsfarm

We have decided that we are going to move out to our property sooner rather than later and don't know what to do with the proceeds that we get from the sale of our house.
We would love to get enough to pay off the land AND build a cabin/small house but we don't think we can do both with the market the way it is.

If we only get enough to do one or the other, which is better?

Pay off the land? Or get the cabin built?

Personally, I would pay off the land and take my time building the cabin. You can still plant crops even if there is no cabin. You can have livestock without a cabin. Once the land is paid for it's yours free and clear and there is nothing like owning your own piece of land. Just my opinion.
tamilee

FarmboyBill · #17 09/17/08, 08:25 PM

The way things might be going next year, theyre will probably be lots of people wiondering what there going to live in, and not have any land either, So if that happens to you, you wont be alone, Itall build your staminia, and youll be the better for it, and at least youll have a place to pitch a tent instead of liveing under a bridge, or in a new era Hooverville

**clovis** · #18 09/17/08, 10:04 PM

Pay off the land.

I also think more info is needed. How big of a home are you wanting to build? Hoping to do it yourself, or contract it out? How many people living in your family? What are your standards of living? Tent? RV? Camper? Shed? 5000 SF home?

Construction loans can be very hard to get if you are self contracting the house. Better talk to your banker.

All in all, I would strongly suggest paying off the land, and considering sinking a well, getting power to the lot (if needed), and finding a CHEAP mobile home re-po.

There is nothing better in the world than living debt free.

Clove

rambler · #19 09/17/08, 10:32 PM

As someone said, not enough info.

What is your prospect for a steady income? You have & will keep a good job?

Then I see nothing wrong with building the house, and pay off what land you can. If you have a good regular morgage.

But, I'm not sure where you are going to live if you don't build the cabin/house - as you are selling off the one you have.

So, I'm all confused, and not sure what your goals and resources are?

--->Paul

soulsurvivor · #20 09/17/08, 10:56 PM

I'd be hoping the house sells and that I'd have enough to pay off the land and enough left to make a good down payment on building a small home. If I didn't get that, I'd be looking to sell the house, sell the land, and find something else that suited me, cause I ain't living in no tent at my age.