Log Home Budget

Your Log Home Budget

Calculating your Log Home Budget can be a nerve racking task. It's the time when you find out how much house you can afford. Interestingly enough, it's also the time when you find out how much house you can't afford.

All financial institutions or lenders work off the same basic principles of calculating what you can afford. They use what is called borrower-qualification ratios. These ratios are based on your income and expenses.

Obviously, financial institutions are looking to lend an amount that works for you, but they will only lend what is needed. In calculating your budget, there are two formulas that are used.

The first formula is based on a percentage (28%) of your monthly income allowing for housing only.

The second formula is based on a percentage (36%) of your monthly income allowing for housing plus recurring debt.

Your financial institution will only lend you the lesser of the two formulas above. (They only want to give you what you need and no more.)

Let's get started on your Log Home Budget

Answer the questions below to get a better understanding or your estimated Log Home Budget. Obviously, the most accurate figures will be given by your lender of choice, but this will help you in moving forward with your log home plans.

Determine your Gross Monthly Income

Salaries_________________________________________________

Dividends________________________________________________

Commissions_____________________________________________

Social Security____________________________________________

Retirement Funds, Pensions, etc._____________________________

Other___________________________________________________

SUBTOTAL_______________________________________________

Determine your Total Monthly Expenses

Auto Loans_______________________________________________

Credit Card Payments______________________________________

Student Loans____________________________________________

Other Long Term Loans____________________________________

Other Personal Debts(Don't include loans that will be paid off in 10 months or less)___________________________________________

SUBTOTAL_______________________________________________

Subtract Total Monthly Expenses from Gross Monthly Income

___________________________ = Gross Monthly Income

___________________________ = Gross Monthly Expenses

___________________________ = Net Monthly Income

Calculating Housing-Only Method

Multiply your Net Monthly Income by .28.

___________________________ = Net Monthly Income
x .28

___________________________ = Monthly Payment

Calculating Housing-Plus-Debt Method

Multiply your Net Monthly Income by .36.

___________________________ = Net Monthly Income
x .36

___________________________ = Monthly Payment

Determining the Maximum Amount you can Borrow

Now that you've figured out your two monthly payment figures using the Housing-Only method and the Housing-Plus-Debt method, you need to focus on the lesser amount.

Take this figure and use it in the mortgage calculator here. Feel free to play around with this tool...maybe changing the term of the loan....or changing the interest rates. Have fun with it!

This will help you determine your maximum amount to borrow for your log home.

Determining your Total Log Home Project Budget

While using the mortgage calculator, you should have selected the option to use your monthly payment amount. This option will help to determine your maximum amount to borrow.

Now you must add your estimated down payment and any outstanding balances owed on your land to that figure as well.

This will help you in determining the Total Project Budget for your dream log home.

Exploring your Log Home Budget can be an informative process. Check these tips out before going to the bank.