Much Can You Afford?
Example: John and Judy Smith would like to build a Timberhaven log
home. They have chosen the Lewisburg model. But can their
budget support the cost?
Here's their completed prequalification form:
1. LAND: -$10,000.00
$10,000.00 still owed on property
2. EQUITY: $35,000.00
$35,000 due from sale of existing home.
3. SAVINGS: $20,000.00
$20,000 from sale of stocks.
4. INCOME: $120,000.00
Combined income of $60,000 x 2
Interest rate at 9.2%.
MAXIMUM HOUSE BUDGET: $165,000.00
Lewisburg Model (2,220 sq.
Square Foot Method: Multiply by $120.00 and $160.00
Analysis of this example:
Unless John and Judy are going
to do a lot of the work themselves, the Lewisburg is too
large of a home for their budget.
Suggestions for lowering the Project Cost are: reducing
the size of the home, using additional savings, increasing
sweat equity, or changing home style to one where the square
footage is more evenly spaced between two floors, roof system
changes, use of drywall...
As you can see, calculating this information is a great
way to determine how much home you can afford...before you
get too involved in the planning of your ideal dream home.