Part of the reason I think ours seems about right is that we have our house on a 15 year note, so the monthly payment is within 200-300 dollars of what they are saying we could afford monthly, but I know they are doing the math on a 30 year note. The best thing we ever did was refinance from a 30 year to a 15 year note. We will be payed off before we are 50. My land will be payed off around the same time.
I suppose. We were approved for our loan on our starter/current home back before my wife was officially fully employed (she was graduating that spring and had a contract signed, but that isn't enough for the bank to factor into the debt to income calculation). I was actually a bit worried when we were going in for the pre-approval meeting and the lender told us my wife's income couldn't be counted. I figured on my salary alone there's no way I would be approved for the amount of house we were looking at. Long story short, as a two year "veteran" of the teaching profession, I was pre-approved for our loan and it was a 20yr loan at that. It was laughable. We took it, of course, full well knowing we would have more income to back us once she started, but it was a bit scary what the bank considered an appropriate debt/income ratio for the loan amount.
I think it boils down to "can" one afford it, vs. "should" one do it. You can afford a lot more house if you are willing to give up a lot of other stuff, but is that really what you want to do. I feel like I would rather own a house than have the house own me. That's why we built from scratch with me doing 95% of the work on my own. It was a bit of a process and took me about 18 months from start to finish, but the amount of money we saved allowed us to have a very affordable home with a lot of higher end upgrades to the finishing's. Now, would I want to take on that task again, I don't think so. Not at my age now, but I had a lot more energy and motivation 8 years ago.
That's the way to go with custom builds for sure. Unfortunately, most lenders around here aren't willing to allow you to act as GC unless you have the assets to borrow against. We thought about trying this approach as it's most likely the only way we would get the house we wanted without paying a contractor $200/sq.ft turn key costs, but I doubt we would ever be able to get the approval. I have land lined up (contract signed), but it's a modified life estate, so it could be a while. In the meantime, we've considered just buying a house and renovating to taste as it's much cheaper in most cases. I watch Zillow for listings daily, but never played with their calculators until the other day (hence the post).
200/sq ft is pretty high, maybe get a few other opinions? I know in Illinois 115/sq ft is the state average. I appraise a lot of new construction and don't usually see those kind of numbers.
We haven't sat down with many since our timeline is indefinite, and our initial designs (timber frame hybrid) would most likely being close to that figure for turn key (we've received estimates from two timber frame companies). However, I think it's reasonable to think we could stick build a decent mid/upper mid level home for around $140-$160/sq.ft turn key. Less if the contractor/lender allowed me to do much of the finish work. The problem is all of the additional site prep costs (including the 1/2 mile long driveway that would have to be built), cost of the land, permitting & fees, etc., Most homes we've looked at finished to the level we would most likely be interested in are listing between $105/$115 sq.ft. Of course there are trade offs for either approach, but just something that has weighed on us a bit as we consider our options.
Not sure who you have talked to about the loan, but I had my best luck with the local bank in my town. They were a much more flexible option for me. Now, it cost me a little bit more in interest for the construction loan than I possibly could have gotten from a larger lending agency, it was worth it since they let me do it my way. I suppose we probably got pretty lucky because I didn't have to put much of anything down either. Times may have changed and it might be a much tighter market then it was about 8-9 years ago though.
The loan it says I can afford seems high, but I could see it being possible if I never want a new truck, end all extra activities for my kids, and never eat out again. I'd rather take a more modest amount and actually be able to live an enjoyable life though.
