If you were to ask any of the 10 designers or architects of The House Designers what is one of their first chores, when they sit with a client for the first time in the process of designing a custom home, they would all conclude that this would be trying to help their clients identify their needs, so that the design they eventually create will be exactly (or very close to) what their client is thinking of. We help clients to develop a program that creates a framework within which to work.
When you develop your own program, write down your needs. Try to be as open and truthful with yourself as possible. Ask yourself what you expect from your new home. Hopefully, you will recognize that these needs are personal requirements. Considerations in this area include space requirements – both the amount and type of space you need – taking into account anticipated changes in your family's size and needs. These are not only today's needs but also your needs in the future.
Will you need to accommodate aging parents or a growing family? Will you need a home office to fit your future job plans? Do you plan to live in your new home after retirement? Is there a possibility that a child will return home after college? Do you have the space to accommodate an elderly, ill or disabled person?
As for today's needs, does your lifestyle demand more space for entertaining? Do you need separate entertainment areas for adults and kids, or are distinct divisions no longer necessary? How do you feel about a Great Room that opens the entertainment area to the cooking and dining regions? Do you prefer a country kitchen where cooking casual meals and informal entertaining are combined in one space?
In establishing goals for your new home, you also need to evaluate the importance that you place on impressing others.
Perhaps you entertain regularly for business or need a house that is a statement of your hard-earned status in life. These considerations could influence your personal requirements and lead to different choices.
If you are less concerned with the perceptions of others than you are with personal gratification, then let your instincts be the guide. You may need to search deeply to strike a balance between personal needs and making a statement.
One of the subjects that your program must address is budget. A few words of caution here: leave ample dollars for landscaping and furnishings. An under-furnished new home with no landscaping can be a real disappointment. Also allow for cost overages; a common recommendation is to add a minimum of 10 percent to the total cost in order to cover the unforeseen changes, additions and upgrades that inevitably occur.
New Home Building Guide
One of the most important steps you will take in the process of building your new home 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 home is likely to cost. If you plan to act as general contractor, you will have to obtain a construction loan and a home 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 Home Builders or check with local contractors and developers. Multiply the desired square footage of your new home 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 home 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 home 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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