Pricing by the square foot of a new home can be very misleading.  It could be compared to purchasing a car by the pound:  A Farrari vs. Honda 2000.  Both are sports cars and their weight is similar.  Yet, the cost per pound would be tremendously different. 

The same is true when designing and building a new custom home. Each home has different conditions:  the site and/or the amenities.  These items include fixed costs.

Fixed costs are features such as fireplaces, appliances, cabinets, light fixtures, baths, site conditions, etc. These would also be considered your interior amenities.

Examples of site conditions include:

    Utility runs – from street service to home
    Trees – more or less, large or small
    Elevation
    Length of Drive
    Location – far out in the country vs. in town

Most homes in the same price range will have the same quantity of these items.  There is usually only one kitchen per home and therefore a similar number of appliances and cabinets.  Many homes have 2 baths even though they may have 3 or 4 bedrooms.  Therefore, the cost is the same for those baths even though the square footage of the 4 bedroom home is probably more.

50% to 65% of the cost of a home is made up of fixed costs.   If this is spread over fewer square feet, obviously the cost per square foot rises. For example:  If those costs are $200,000 notice the difference in price per square foot

These two homes could be next door in the same subdivision, but yet the smaller home’s cost per square foot of living area is $9.53 higher. 

Also, if living area only is used, the cost of porches and garages is included in the per square foot cost.  The cost per square foot of this area is substantial.  As the size of garages and porches increase the amount per square foot increases even though living area is the same.  For example:  a home may have a front porch and rear porch where the home next door has only a rear porch.  In this case the cost of the front porch area in the first home will be spread over the same square footage as the home next door without a front porch. 

The cost per square foot varies according to the incremental size of the “All Other” areas.  Assuming that an additional porch in the front in the example above costs $10,000:

Again, for example, the subject home’s cost is around $3 more per square foot than the home next door without a front porch.

We are not suggesting that we should not build porches.  Today’s relaxed lifestyle lends itself to more use of the porches and other areas.  Therefore, we are suggesting that pricing a home per square foot does not always give you the true picture.  Each individual has his own way of expressing himself in his home thru the use of amenities and space. 

At Hearthstone Homes by Ron Lee and Ron Lee Homes we use a great deal of custom amenities in each home.  Therefore, there are times when our price may seem a bit higher than our competition.  We pride ourselves on creating a home that functions in every way and in every square foot.  Not just one or two splashy extras.

Some of Our Extras You Need to Compare with Other Builders:

A Watchful Eye on Construction

Higher Quality Lumber

Top-Notch Bracing

Tight Envelope – Insulation, Sealing, Mech. Equip

Secluded Bedrooms Without Wasted Space

30” Ovens

Upgraded Media Wiring

We like to ask these 3 questions in order to understand where you need to be and how we can help you create your new home:

1.  How much would you like to spend?
2.  How much could you spend if you pulled out all stops?
3.  What would you be willing to spend to get most of the amenities and finishes you want in your new home?

We encourage you to consider this information when you are ready to buy or design a new custom home in the St. Tammany Parish area.  For More Information, Contact Us Directly at 985-626-7619 or e-mail info@ronleehomes.com.

Tax Provisions:

• $8,000 first-time home buyer, true tax credit (no repayment) for the purchase of a principle residence between January 1 and December 1, 2009.  Recaptured if home is sold within three years.  Removes the restriction on the use of tax credit proceeds with Housing Finance Agency-issued tax exempt mortgage revenue bonds.  
• Short-term gap financing for Low Income Housing Tax Credit (LIHTC) projects:

1. 1. Provision allowing states to turn in portion of 2009 LIHTC allocations for cash.
   2. Special appropriation of $2 billion in HOME funds.
   

• Up to a ten-year deferral of tax from business debt cancelled as part of a repurchase or restructuring.
• 5-year carryback of 2008 net operating losses for businesses with gross receipts of less than $15 million (three year average).
• Extension of enhanced bonus depreciation.
• Extension of increased small business expensing.
• Enhancements to the section 25C program for energy efficiency remodeling improvements to existing homes.
• One-year patch of the Alternative Minimum Tax.
• Increase New Markets Tax Credit allocating authority for 2008 and 2009.
• Delays for one year the start of 3% government contractor withholding requirement.

Appropriations Provisions:

• $2 billion for full year payments to owners of Section 8 project based rental assistance properties.
• $2.25 billion through HOME program and Low Income Housing Tax Credit program to fill financing gaps.
• $1 billion for CDBG.
• $2 billion for Neighborhood stabilization program.
• $1.5 billion for homelessness prevention activities (help with rents, etc).
• $250 million for energy retrofitting and green investments in HUD assisted projects.
• $1 billion for Section 502 direct loans under the Rural Housing Service. 
• $10.4 billion for Section 502 guaranteed loans under the Rural Housing Service. 
• $27.5 billion for highway spending.

Other Key Provision:

• Increases in FHA, Fannie Mae and Freddie Mac loan limits to 2008 levels.

Terms to Know:

Amortization schedule – Your month-by-month payment schedule that shows how much of the interest is paid off vs. how much of the principal is paid off each time a payment is made is called your amortization schedule.

Loan term – How long the time period is that you have to pay back the loan. Home loan terms are 15, 20, 30, or 40 years.

Adjustment period – When and how often the interest rate on an ARM can change. Each ARM has a time period at the beginning where the interest rate stays the same (for example, 3 years). After that, the rate usually increases each year. That would be referred to as an ARM with a 3/1 adjustment period.

Lifetime cap - The maximum rate allowed and maximum number of increases.

Periodic cap – How much your loan is allowed to increase each year.

Mortgage Loan Types:

      Fixed-rate mortgage – A fixed-rate mortgage is one where the homebuyer is locked into the same interest rate for the entire duration of the loan, no matter its length. This is the most common type since having the same payment every month is the simplest method. The benefits of fixed-rate mortgages are protection against inflation, low risk, and the ability to plan long-term since the homebuyer will always know what their mortgage payment is. However, if rates drop, your interest rate will remain the same unless you refinance.

      Interest only fixed-rate mortgage – An interest-only option divides the loan into two periods. During the first period the homebuyer only pays off the interest of the loan. In the second period they pay both. The benefit of an interest-only option is that it frees up cash to do other things (for example, it would be good for a “fixer-upper” type situation where a lot of money will need to be put in to the home initially). However, these loans should not be offered to those who won’t be able to manage the second half of the loan when the payments increase to include a portion of the principal.

      Adjustable-rate mortgage – A mortgage during which the interest rate can change, decreasing or increasing the homebuyer’s loan payments. These are popular because they usually start with a low rate and low payment. Interest rate adjustments are based on the index and the margin. They are adjusted according to a published index, reflecting current financial market conditions. Like fixed-rate mortgages, there are also interest-only options available with adjustable rate mortgages.

      Balloon/reset mortgage – A mortgage with an amortization schedule based off of a 30-year loan. But at the end of either a 5 or 7 year term the homebuyer has a choice to either pay off the entire remainder of the loan, or reset the mortgage. Choosing to “reset” the mortgage means the interest rate will go up to the current market rate for the remainder of the loan term. Usually a home buyer can only exercise the reset option if: - they still own and occupy the home - the previous year’s payments have all been on time - there are no other liens against property If a homeowner does not qualify to use the reset option they do have the option of refinancing. However, if the homebuyer’s income has lowered at the end of their term, refinancing could prove difficult. This type of mortgage is different from adjustable-rate mortgages in that the rate can only increase one time. Balloon/reset mortgages are a good idea for the homeowner who plans on selling their home before the balloon payment

If you are just getting started looking for a new home in St. Tammany Parish or if you are looking for a builder to build you a custom home in Mandeville, Madisonville, or Covington, Louisiana, visit our Homes for Sale Page, Contact Us Directly, e-mail us at info@ronleehomes.com or call us at (985) 626-7619.

Click Here for the Source of Information.