Have a realistic budget
Although the budget should include the
land and we hope a timber frame structure,
one needs to plan for other items such as
a well, septic system, and a road or
grading work. What amenities will you need
right away? Is there is a budget issue
which can you postpone until later? How
much are your building permit and taxes
going to be? How much will your builder's
risk and then home owner's policy be?
Items to consider will be your lighting
needs, home appliances such as a range,
refrigerator, dishwasher, washer, dryer,
water heater and such.
What type of cabinetry do you want in
your kitchen, bathrooms, laundry, or
closets? What type of counter tops do you
wish to put in?
If you plan to borrow money to finance
your timber frame home, talk with several
lenders about their construction loans.
Banks and Mortgage companies will then be
able to give you a better idea of how much
they are willing to loan you and if you
have a realistic budget. They will also
explain to you how and when monies will be
dispersed your house is being built.
Lenders tell us they use what are called
borrower-qualification ratios to determine
how much they will be willing to loan you
for your project. We have been told by the
banks in our area that they can qualify
you on a 28% of your monthly income or on
a percent, 36%, of your debt load.
Generally speaking they tend to use the
more restrictive of the two. The following
work sheet will give you a rough idea how
much you will be qualified to borrow. It
is important that you review your finances
with each prospective lender to determine
what they will lend, because it can vary
greatly. |
