Budgets are challenging by necessary. To create an accurate budget for home construction that also considers future maintenance homebuyers must be willing to honestly answer some hard questions.
It’s true that these questions can seem overwhelming, but Honest Abe’s sales representatives have worked with hundreds of clients who have felt the same way. Together, they’ve found that answering these questions helped put a new home project on a realistic course from the beginning, enabling these customers to build their forever home.
The Hard Questions
- How much money are you willing to put into your new home?
- How much cash do you have available for a downpayment?
- How much can you afford in monthly payments to cover the amount you need to borrow?
- How much will the property taxes be on your finished home and land?
- How much homeowner’s insurance will you need to cover your investment?
- How much can you set aside for routine home maintenance and upkeep or non-covered emergencies?
An important component of budget development is understanding debt-to-income (DTI) ratio, especially if a homebuyer requires a loan to complete the project.
To determine DTI ratio calculate all monthly financial obligations. These include house payments, car loans, charge cards, etc. Divide the total by the household’s monthly income. The final number should not exceed 33-36 percent of the cost of a homebuilding project. Further, the total monthly house payment should not exceed 25 percent of the stable monthly income.
Honest Abe helps customers balance what they want with what they can afford. Call 800-231-3695 or email info@honestabe.com for help on a budget that turns a dream into a forever home.
Watch the video below to learn how Honest Abe Sales Representative Ethan Birdwell help clients plan and manage a construction budget.
