Cabin Creek Timber Frames .. Financing Your Timber Frame Home

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.

I was going to put in an amortization schedule here; but due to all the different types of people and their needs as there are out there, I am providing you with a link to a web site. The web site use is FREE; you will need some information on hand though. The website is:

• the interest rate the bank quoted you,
• the term of the loan in years,
• the total amount of the home loan.

Construction costs vary greatly from one area of the country to the next. I have seen finished timber frame home costs in our area range from $130. to $400.plus per square foot depending on how it was appointed.