Developers

1.3 Budget and FinanceIt is important that a detailed budget is prepared and used to keep the projecton track at all times. There are many products and construction methods thatare available in various price ranges. Before you start anything you might wantto talk to your bank or mortgage company to make sure you are able to get themoney needed to complete your project.Banks and LoansApproval is based on the applicant's credit worthiness, (taking intoconsideration present and past credit performance), job and residencestability, and the financial ability to service the loan. The maximum amountthe bank would finance for a construction loan is 80% of the appraised valueof the property, inclusive of the value of the land. The estimated interestamount payable during the construction stage is worked into the loan. Ifthe loan is approved, an origination fee, legal fees, interest and escrowadjustments would be deducted from the requested amount.However you chose to finance your purchase having the monies availableprior to closure will be significant and so an early start to understandingwhat would generally be required in loans of this nature is absolutelycritical. You may obtain a mortgage loan for up to 30 years if it is residentialand 20 years if it is commercial.Don't forget to budget for the retaining walls/structures, driveway,sidewalks, landscaping, fencing, blinds and maybe even some new furnitureor appliances.InsuranceHomeowners insurance protects your home, its contents, and indirectly,other assets in the event of fires, theft, accidents or hazard impacts Astandard homeowner's policy will protect you from things like fires andfallen trees. Coverage for the impact of natural hazards such as floods orearthquakes may require additional coverage. Banking institutions mayrequire insurance protection during the construction phase of your projectand for the duration of the Loan. It is important that you have a clearunderstanding of these costs as they will impact on the actual fundsavailable for construction and your monthly payments on the loan.3