FACT SHEET

THINGS YOU SHOULD KNOW

WHEN YOU WANT TO BUY A NEW HOME

When you first start looking and you seek advise you will find everyone is an expert.  Be wary of advise from those that are not in the business, or do not have a background in financing.  Home Buyers will review many Production Builder’s product to see if they can find something that meets their family’s needs.  They are forced to select from a limited assortment of models that must buy something as close as possible to what their goals are.  Most people do not have the foggiest notion what knowledge is required in order to buy a NEW CUSTOM HOME. They do not know that a Custom Home Designed By You can be bought at approximately the same price as a Production Home; and you receive exactly what you want. Once you find something that you like there are a million questions.

1. Is the builder reputable and do they honor their contracts;

2. How do I finance the home I wish to buy;

3. How do I finance and sell my existing home, if applicable;

4. How long does it take to build a Custom Home;

5. Do I have to accept the Custom Builder’s plans, or can I be innovative?

 We will attempt to state the facts about ourselves and the programs offered to you by Lenders with the intent to give you the knowledge so that you can make an EDUCATED DECISION BASED ON FACTS.

No. 1 – As to our company, INTERSTATE VENTURES, INC., a full service organization  The principals and their associates have been in the construction industry since 1960, and this company has been in existence since 1975.  We have produced 20 Custom Communities and have can give you references as to how we live up to the terms of our contracts, both during construction and service after sale.

No.2 – Understanding Financing is the hardest part of the process.  Following are some facts and figures about some of the  programs that institutional lenders are offering as of this date. (8/10/07).  We will assume a $400,000 mortgage.  We always use a Construction/Permanent Loan which saves you transfer taxes, estimated at about $8,000.  The general knowledge imparted below will vary over the years, but the process remains the same.

PROGRAMS AVAILABLE:.                                          

A. 5/1 Mortgage means that you pay the same rate for five years, then refinance The rate is the same during and after construction If Today’s rate is 6.0%; Your monthly principle and interest is $2,400 before tax savings, less approximately 40% for State and Federal tax deductions, or $1,440. The family income required to buy is $82,000.
 

B. 30 Year Fixed Mortgage means that you pay the same interest rate for the entire 30 years. The rate is slightly higher during construction, and becomes a permanent fixed rate when it is determined at Occupancy. If today’s rate is 6.25%; Your monthly principle and interest is $2,460 before tax savings, less approximately 40% for State and Federal tax deductions, or $1,480. The family income required to buy is $84,400.

C.  Interest Only means that you pay interest only for the period of the loan.  Principle curtailments can be made at any time during the loan and is ideal for those whose income stream is irregular, but whose income is more than sufficient to qualify. If today’s rate is 5.0%; Your monthly interest payment would be $1,670 before tax savings, less approximately 40% for State and Federal tax deductions, or $1,000.  The family income required to buy is $57,200.  We only recommend this program if your income is much higher, but wish relief in monthly debt service due to other family needs.  Using this program with the low income stated can be hazardous.

D. Interest Rate Buy-Down: In order to reduce your debt or possibly let you purchase more features in your new Custom Home, you can Buy Down the Interest Rate on Your Mortgage. This means that you can pay the lender 2.0% of the mortgage amount at the time of origination of the permanent rate which will benefit you as follows;

5/1 Program -- The current rate of 6.0% would be reduced to 5.0%, a reduction of approximately $250/month.

30 Year Fixed -- The current ratio of 6.25% would be reduced to 5.75%, a reduction of approximately $130/month.

No. 3 – The above programs are available to you to recommend to your existing home buyer.  Those that own a home can use the equity that has been accumulated to act as collateral for the down payment on your new Custom Home.  We do not recommend putting your home on the market until we are breaking ground. 

No.4 –  It takes us from six to nine months to build a Custom Home, depending on its complexity; plus the Planning Period.  In today’s market you will need that amount of time to sell your existing home.  The hardest part of selling an existing home is the transition to determine when your buyer can move in, and when we can have the Custom Home ready for occupancy.  There are many factors that can interrupt a building schedule, so that wording your existing home contract is critical to an easy transition.  Ask our Housing Representative.

No. 5 – When you buy a Production Home it is very hard to have a large Production Builder make a lot of changes. They cannot maintain their pricing structure if they are constantly telling their tradesmen that the blueprints are not what they are going to build. As a Custom Builder we have several sayings - When we build “NO TWO HOMES SHOULD LOOK ALIKE”, and we like to instill in you the thought that “YOU ARE NOT BUYING OUR HOME, WE ARE BUILDING YOURS”. Each home we build has its own set of plans containing your ideas which you must approve. Our architect will make any reasonable changes and create something that is individual to your family’s lifestyle. It is most unusual if we use the same set of blueprints twice.