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Resources
Interest Rates for Home Loans in India
By Aditya Jaiswal
Our country, India, where population has already crossed 1 billion mark measures 3214 km from north to south and 2933 km from east to west with a total land area of 3,287,263 sq km. Even with such a Read more...
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Resources
You Do Not Need Special Training or Plenty of Time to Start a Home Based Business
By Calvin Heng
Money makes the world go round, literally. With the cost of everything rising considerably every day, such as gas prices, insurance rates, prescription costs, and interest, everyone is looking for a Read more...
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Resources
Here's How to Organize Your Home and Feel Better at The Same Time
By Patricia Wagner
Did you know that a clean orderly home can give you an enhanced sense of well-being? Living in a disorganized mess can make you feel disorganized too. Your home is meant to be a haven from the Read more...
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A residential structure containing one to four dwelling units, or a condominium unit, regardless of the number of units in the building.
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#Welcome to
Home Buyers Boot Camp real estate listings buyers guides - your comprehensive era real estate resource.
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Home Building Guide - Financing Overview
By Guest Author
One of the most important steps you will take in the process of building your new will be adequate budgeting. The biggest reason construction projects fail is costs are underestimated. Plan your budget carefully and be as informed as possible about one of the most critical phases of your building project: FINANCING!
The first thing you have to do is figure out how much you can afford to spend and how much building your new is likely to cost. If you plan to act as general contractor, you will have to obtain a construction loan and a mortgage. If you have good credit with your bank, you may be able to secure both loans from the same bank. If not, you may have to deal with two different lending institutions.
To get a general idea of the average cost per square foot for new homes in your area, call your local chapter of the National Association of Builders or check with local contractors and developers. Multiply the desired square footage of your new by the average cost per square foot to arrive at a general cost. Developing a budget and calculating costs will take some time and research, but it is a crucial
step in the building process.
Do You Qualify?
When you finally figure out your budget, adding a minimum of a 10% contingency to the total cost in order to cover the unforeseen changes, additions and upgrades that inevitably occur, is a very wise thing to do. And don’t forget to budget for landscaping, including decks and patios, window treatments and furnishings—something many people overlook or leave too little for – since they are at the end.
The first loan you should get is the mortgage because without long-term financing it will be impossible to get a construction loan. Some important terms you should become familiar with are:
Mortgage Payment-to Income Ratio (MR) is the ratio of your proposed PITI (Principal, Interest, Taxes and Insurance) payment to your gross monthly income. Depending on the lender this usually varies between 28 to 30 percent.
Total Debt-to-Income Ratio (DR) is the ratio of your total monthly debt payments to your gross monthly income. Depending on the lender this ratio usually varies between 36 to 41 percent.
Loan-to-Value (LTV) is the ratio of the total value of the house to the loan amount which is usually 90 percent or less. So the requested loan should be less than 90 percent of the appraised value of the home. On larger homes many lenders will only offer 80 percent or less.
The lender you choose may use one or a combination of these methods to determine if you qualify for your mortgage.
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