Panelized & Packaged Home Blog

How Much Home Can You Afford?

ncph — Thu, 22 Jul 2010 18:07:37 +0000

Home ownership is one of the wisest decisions a person can make. It is also the largest financial purchase that most people make in a lifetime. If you were to believe everything you saw in the newspaper or heard on the evening news, you might think home ownership is a lost cause. Fortunately for most the reality is quite different. Mortgage standards have tighten for some borrowers but for most the conditions for obtaining a loan have remained the same.

The conventional, conforming mortgage market is functioning well and this is where most home owners want to be. The major difference today is that the mortgage lender will be scrutinizing the mortgage application more carefully in order to ensure that the borrower is capable of re-paying the loan. One thing that has not changed is that mortgages are available to consumers with a good credit rating. Lower interest rates make a more affordable product which is an incentive for individuals with a good credit score.

One of the first steps to consider in building your own home is to meet with a qualified lender or mortgage broker to determine how much of a loan you will qualify for first for the purchase of the land, the construction loan and finally the take out loan which is when your home is completed and you will have your permanent financing. You will first want to request an informal review of your financial position to determine how much money you can borrow. Pre-qualifying can help you to establish your budget, identify problems with your credit such as an error on your credit report and allow you to compare loan programs. Pre-approval requires a formal application and partial processing of your loan application.

The amount you can borrow is based on factors such as your assets, how much you owe on consumer debt like credit cards and car loans, your income and stability of your employment. If you fail to qualify for the amount you would like your lender or mortgage broker may be able to advise you of options that you can do that would enable you to qualify for a larger loan.

A land purchase loan helps you to buy the land before there is an actual structure on it. These loans are generally a little more costly and more difficult to obtain than a conventional loan as a lot is more difficult for a lender to re-sell in the event of foreclosure. Your mortgage broker can advise you whether comparable properties will support the value of the land and the percentage of down payment the lender requires.

In the case of a construction loan, the lender is going to want to know what the proposed construction is going to be and then they will want to verify that the owner and/or contractor is building per the agreed upon plans. The lender will require an appraisal of the home and finishes that you are proposing compared to homes in a similar neighborhood recently built of comparable size and quality of materials. In addition to the normal requirements such as a credit report, loan application and verification of employment, you will be asked to provide some additional documentation. First you will be asked for a preliminary set of plans that the appraiser can use to compare your home to other comparable properties. Along with this a construction cost breakdown will be required. This is a detailed list of the materials and cost of labor for the construction of your home.

Once you as the borrower, the home you are proposing to build and the value of your land satisfy the lenders requirements, there is frequently a few more documents that the lender will require prior to actually funding your loan. Many lenders require a licensed contractor be hired but in working with a qualified mortgage broker who specialized in construction lending it there are lenders that will work either with an owner/builder or with an owner using a project manager. The other requirement prior to funding is the plans being permitted. And then the fun begins!

Build your Custom Home without the Custom Price Tag

ncph — Sat, 10 Jul 2010 03:10:46 +0000

Have you ever dreamed of building your own custom home? Some people want to design and build their own home so that it aesthetically does not look like all of the other homes in the neighborhood. Some people have special needs that require a specific design. And some people just want the satisfaction of having their home be brand new and just the way they want it to be. If you count yourself among this group, we are going to walk you through the steps to achieve your goal from selecting the right piece of property to finishing your home all within your budget.
The first step in this process is the decision to embark upon the custom home process. This for most is one of the most important decisions of a life time. It is frequently a commitment that requires time and patience. But when the project is completed, the pride of accomplishment and the satisfaction of a job well done make the process very worthwhile. Spending ample enough time in the planning stages can save thousands of dollars later on and it is a key ingredient in making the project enjoyable.
Determining your budget is an important and critical step. Meeting with a loan consultant can help you determine the amount a lender will be willing to lend you depending on your down payment, income and the debt that you have and will be able to estimate the monthly payments that will be required. It is important that you and your family are comfortable with the amount and time frame of the mortgage.
Using this amount, it is time to find and purchase land. Working with a qualified real estate agent determine what properties are selling for of a similar size house and lot in the area you are interested in. Will your down payment and loan pay for the house that you are thinking of building and the lot? The approximate cost of construction of a house of similar size plus the cost of the lot should be equal to or less than the comparable properties. If the sum is much higher than perhaps the lot is overpriced. If the lot appears to be fairly priced after getting your offer accepted, it is time to carefully examine all aspects of building on that specific site including soil, permits and utilities. Again, all of this gathered data will help determine the final cost of construction and whether or not the lot is affordable.
Having acquired land, the next step is to determine the design of the house. This can be achieved by working with a design professional using either standard plans or hiring an architect to design a truly custom set of plans. One word of caution is to make sure that the construction drawings meet the requirements of the local building department. Plans purchased from sources outside of the state of California may not meet our strict seismic, fire and building standards nor may they meet the requirements of local building departments for licensing. Additionally, unless the lot is perfectly level, the foundation needs to be designed and engineered for each site.
Armed with an approved set of plans, your next and very important decision is whether to hire a general contractor or to act as an owner/builder and supervise the construction yourself or to do a combination of both. We have found that many clients prefer to control the construction of their home once the foundation is in and the framing is done using a general contractor up to that point. Using a pre-cut panelized system for the framing makes this process easier, faster, and more cost effective. It is also a greener alternative to standard framing. Once the exterior shell is closed in, the owner can hire and supervise the sub-contractors or continue to work with their general contractor.
Carefully choosing finishes to stay within budget is probably the most difficult (and fun) part of building. Again time and research can pay off in the long run in obtaining the look, feel and style of your custom dream home. Comparative shopping and the internet have become invaluable tools in finding the best price for different materials. When you are choosing a material or a sub-contractor compare prices or bids along with workmanship. This can help you stay within budget while achieving the highest quality of construction.
As these articles progress we will expand and offer more insight into the process of building your own custom home. Our goal is to make the process only but enjoyable and a worthwhile investment of your time and energy.

The Top Six Reasons To Build Your Custom Home Now

ncph — Fri, 02 Jul 2010 03:19:21 +0000

With home values falling and the mortgage market still in crisis, is this a good time to build your own custom home? If you want the best investment of your time and money in building a new home – now is the time to build. It is the time to make your ideal home a reality and not just a dream. Homeownership and the financial security that comes with this investment have many rewards and the current market conditions can make building a reality.

1) It is a buyer’s market. Land prices – often the single biggest investment in building a custom home – have dropped as much as 50% in some areas. Investors who have in the past bought speculative lots are not doing so with the current slowdown in the housing market. This leaves many extremely well priced lots available for the buyer interested in purchasing the land to build their own custom home. In terms of finding land at a good price, many feel that there has never been a better time.

2) Interest rates are at a very attractive level. Interest rates are at an all time low and recent rates have averaged lower than those for the previous three decades. A current 30 year fixed rate loan is very attractive and there are many lenders willing to help make dreams a reality.

3) Homeownership is a solid investment. Real estate has proven time and again that it is a safer alternative to other, more volatile investments. While the housing market has cooled recently and returned to a more average activity level, homes will still appreciate even if at a more sustainable rate.

4) A new custom home offers the consumer more. A custom home built today on average is 700 square feet larger than one built 20 years ago. To the owner this means more windows, closet space, spacious garages, larger kitchens and more bathrooms. In other words a new home that meets the needs of today’s lifestyles. The layout of a new custom home offers the space utilized better to fit our busy schedules. Perhaps a great room unites a busy family better than a formal dining room. Or the additional storage meets the needs of an active sportsman. The goal is to have a home that truly works for you.

5) Energy efficient and green construction is not only good for the environment but also the pocket book. Combining low maintenance, energy saving construction and safety elements, the value and function of your new home is enhanced. Building your own home can not only save you money today but for years to come in utility bills and maintenance of aging features. New building practices such as factory panelization of pre-engineered walls and roof trusses are designed to improve performance, durability and maintenance over older conventional building practices.

6) Due to the construction slowdown custom home builders are experiencing lower material and labor costs. The current normalization in the market has already resulted in a drop in lumber costs. This same savings may also be realized in other materials required for the construction of your new home. The slowdown also has different trades people scrambling for business. This has created lower labor costs and you may not have to be on a sub-contractor’s waiting list for six months!

Building your own home is a huge commitment that warrants serious consideration. No one knows how long this buyer’s market will last but housing markets are cyclical. As the market cycles land, lumber and other material costs will rise. It is still important to do all of your homework and plan carefully before the first shovel of dirt is turned. But if you have always wanted to build your own custom designed home, today’s real estate and construction markets can make it easier and more affordable to realize your dream.