Going Custom? This is how you do it.

Going Custom-You have decided you want a newly constructed home but know you want something that is a more individualized than what you would find offered by medium to large builders. (We will discuss renovating an existing home another day). You will likely end up working with a custom builder. So, the next question you need to ask yourself is how much customization do you desire. Determining how much control you want over the design dictates most of the answers you will need before you pull up Zillow or call your agent. It is at this stage you should determine a basic budget (total amount you want to spend) and start talking with builders, seeking an outfit who will attentively, efficiently, and effectively deliver your legacy home. We believe Langhorne Custom Homes should be that builder but understand every buyer’s need to find the company or person with whom they are willing to entrust with this responsibility.

The Fully Customized House

The fully customized house is typically for someone who has envisioned the house of their dreams and is looking for capable and caring people to help them bring it to life. This approach requires the most legwork but will result in a home that truly reflects the life you want to lead. Be prepared to start by finding the right lot. At this stage, it would be prudent to bring in both your builder and your architect so they can weigh in on potential advantages and pitfalls of any piece of land.  Experienced builders walking new land are like forensic investigators and can uncover expensive problems before you become financially or emotionally invested.

Once you know where you want to build, you will sit down with your architect. These will be some of the most exciting and fun hours of the experience (watching our architect‘s team transfer our verbal descriptions into a gorgeous structure is always a blast) but be mindful of keeping your eye on your budget. Houses have a way of growing once you are sitting in front of some sketches.  Having your builder weigh in at this stage will help you understand price and construction issues before final plans are developed.

Construction begins and your home starts to take shape. Will and I both still get a thrill watching the house develop from concrete foundation to defined rooms with window views. Hopefully, you will have time to come out and smell the poured concrete and cut wood. Each custom home presents some small surprises as it is being framed (you might find a new place for storage or find a closet feels a little small). This is a great time to ask questions and make requests. Walls can often be moved or doors added.

Design selection begins in earnest as soon as the framing starts. Depending on your interest and confidence, you might want to hire a designer for all or part of your selections. We value the contributions of our terrific designer as she helps create the beautiful finishes in our spec homes. If you know what you like and would like to rely on your own eye and some solid recommendations, we have a list of terrific suppliers who all have people who can help narrow down your choices based on look, use, and price.

As the house develops and the finishes are installed, communication with your builder will be critical. At this stage, both you and your builder will be focused on budget and delivery date. Staying informed about both will be the best route to a satisfying finish. It is important to understand how design changes or delays can adversely affect both the bottom line and completion date. Your builder should also know your expectations. Again, open communication is integral to a successful delivery. Will and I consider successful deliveries to be those in which we have developed not only great houses but also friendly relationships. No one wants their dream home sullied by bad stories of any kind. Please consider allowing us to help you create great memories of building a fantastic home.

Not sure you want this level of involvement? Our next post will cover options including purchasing your home while the house is underway.

Financing Your Home?

Financing

When buying or building a new home, the first thing you need to do is determine how much home you can actually afford. Your mortgage lender uses a number of ratios, lifestyle factors and your credit history to decide the maximum mortgage amount they will lend to you.  Here is how you can get an idea of what that amount will be, before you talk to your mortgage broker.

 

DtoInc

The debt-to-income ratio is the percentage of your monthly income that goes toward paying off debt.  This considers debt such as school loans, car loans, credit cards, etc.

For example, if you have $2,000 in debt payments a month, but your monthly income is $10,000, your debt-to-income ratio is $2,000/$10,000 = .20 or 20%

The lower this number is, the better, as this percentage is combined with other ratio results to determine the full amount of debt you can take on.

housing

Lenders prefer that your housing costs (principal, interest, taxes & insurance) not take up more than 28% of your pre-tax monthly income. This is the housing ratio.

back-end

This is the ratio combines the previous two percentages.  It is the ratio of all your debt + housing costs vs. your monthly income. Lenders prefer this to stay around 36%.

It is important to note though, that these ratios are not set in stone. The “qualified mortgage rule” allows for legal protection of well-documented mortgages with a back-end ratio of up to 43%.

credit

If you have a good credit score (740 or above), you will likely receive a low interest rate on your mortgage loan, allowing for you to take out a larger loan.

downpmt

If you have a large down payment, then the amount of the borrowed loan decreases, meaning you can purchase a more expensive home. There are a variety of acceptable down payment percentages.  Some lenders allow for a down payment of as little as 3%.

lifestyle

There are other factors that your lender does not always take into account.  Do your children attend daycare or private school?  Do you belong to a country club? Or do you like to dine out often?  These are large expenses that a lender may not consider when formulating your approved mortgage amount.

 

All of these things are useful in determining how much home you can afford.  You know the full extent of your current monthly commitments, and it is important for you to keep these in mind and choose a monthly mortgage payment that you are comfortable with. Staying realistic will help you in the long run and let you live the life you are most comfortable with.