Defining affordability
Affordability is a combination of two factors:
cost and financing. If the cost
of the home of your dreams exceeds your ability
to pay, it's not affordable.
Improving affordability
To improve affordability, therefore, you either
have to reduce your costs or find a way
to increase your finances — or
both.
Buying an existing log home
If you plan to buy an existing log home, the question
of affordability becomes a lot easier. You already
know the asking price, and you can get an inspection
to tell you if you'll have any repair costs (assuming
the seller doesn't pay). All that's left is any
remodeling you might want to do.
Building a new log home
Determining the cost and affordability of building
a new home is a multistage process. A suggested
plan of attack is to first decide on the size
of house you need. You can use our Home
Size Estimator for this.
Then use our Log
Home Cost Estimator to determine your approximate
turn-key cost for a log home of this size. This
will tell you about how much money you'll need.
Finally, use our Affordability
Calculator to find out if you can afford a
home of that size at that price, based on your
financial situation.
If you can't afford it
What if you find that the cost to build exceeds
your ability to finance? In this case, you can
use the above calculators to play around with
reducing the house size, eliminating extra features,
and adjusting other costs. This will allow you
to judge what size house your budget can tolerate.
Also read What's
it Going to Cost Me?.
If you find that the house that you can afford
is simply too small for your needs, then you should
attempt to improve your finances or look for creative
financing techniques.
Do you have additional sources of cash that you
haven't considered? Will your income increase
in the near future? Do you have property or investments
that you might want to liquidate? Can you reduce
your debt load — pay off credit cards, consolidate
some debts, pay off a car loan, or finish paying
for the land that your log home will occupy?
Anything you can do to reduce your debt-to-income
ratio will improve your chances of being approved
by a mortgage company for the home loan that you
want. The rule-of-thumb used by most lenders is
that your total monthly debt obligations, including
house payments, should not exceed 36% of your
monthly gross income.
If none of the above remedies works out, you
may have to admit that you aren't quite ready
for the log home you've dreamed about. Putting
your plans on the back burner for a few years
may be your best option for now. In the future,
your finances may improve such that you can revive
your plans and get started again on your dreams.
