OTHER ROUTES
Multi-Family Dome
Another approach may be to think beyond just your home. A multi-family dome complex may fit your needs exactly. You can share the costs, debts, responsibilities, and joys of dome living with others.
Multi-family housing, such as a duplex, often has lower land acquisition costs per unit and lesser construction costs per square foot than single family residential housing.
A dome complex, made of separate but linked domes, is perfectly suited for this. But be sure to scrutinize zoning laws.
And, for heaven’s sake, be absolutely sure of your compatibility with your choice of co-Dome owner’s. Rely only on a relationship that has stood the test of time and troubles.
A variation of this is to finance and build a multi-family dome complex, then rent the additional units. Note that financing an owner-occupied income producing property has a different set of qualifying standards. Although rarely done, it could be an especially satisfying business venture in a tourist area such as a lake or beach.
Home & Business
Are you a one person business such as a C.P.A., manufacturer’s representative, or service repairman? Why maintain a separate office and its overhead?
A possibility that might work for you is to consolidate personal and business-housing expenses for mortgage, utilities, insurance, etc. A multi dome complex works exceptionally well, with the office in a separate dome from the living areas of your home. A bonus is the elimination of the time and expense of commuting to an office.
Verify viability of this attractive plan in your area with the zoning office. These guys are notorious for being real nitpickers.
PERMANENT MORTGAGE
The typical method of financing new construction is to secure a short-term construction loan, which is paid off and replaced by a long term, or permanent mortgage. The same lender may provide both. The construction loan is explained later on page 16.
Financing a dome is more difficult than obtaining a mortgage to build a typical home because lenders are very conservative and they may question the resale value just in case you are run over by a truck and they have to sell the dome. Thousands of domes have been built in recent years, but they are still very much in the minority. Many lenders feel that domes have yet to prove themselves in the long run. So they are understandably hesitant to risk their institution’s money on an unfamiliar structure as well as an unfamiliar person.
But you have the knowledge and the determination to change this. Familiarize them with the dome as you acquaint them with yourself. It’s up to you to sell yourself and the value of your dome.
Bankers are a tough bunch, right? Not necessarily. The personalities of lenders are changing. Today a Loan Officer is just as likely to be a single woman who lives in a stilt house on the river and drives a VW, as the stereotypical stiff collared traditionalist who is chauffeured from his estate in a Lincoln.
Take the right approach: a positive one. This is a very important business arrangement between associates, not an emotional tug-o-war.
HOW MUCH CAN YOU BORROW?
If you decide to pursue a mortgage route, you should know approximately what potential lenders would loan you. There are some basic rules of thumb that can help you in figuring your…
BASED ON LOAN-TO-VALUE
A lender will only loan you a percentage of the value of your building site and your completed dome, expecting you to also contribute a percentage (usually 20-30%). Comparing the maximum amount a lender will loan to the total value of your land and home is referred to as the loan-to-value ratio.
If the combined estimated value of your completed project (including land, home, and all the improvements) will be $100,000, and the loan-to-value ratio of a particular loan is 70%, then the most they will loan you is $70,000. Your contribution must be 30% or $30,000 in the form of your equity in the land, available cash, and deposits on the Building Kit.
In other words, the percentage you must contribute (determined by Loan-To-Value ratio) and the value of your contributions will determine the maximum amount you can borrow. For example, if your equity, cash and deposits equal $30,000, the Loan-To-Value is 70% and your required contribution is 30%. Your maximum mortgage is $30,000 divided by 30, then multiplied by 70, which equals $70,000.
Your land equity, available cash, and deposits … $____________
Divided by your required contributing percentage … ¸________
Multiplied by Loan-To-Value % … x________
Equals your maximum mortgage … =$____________
Increasing the amount you’re asking the lender to put into this project increases his risk and reduces yours. If you need to raise the loan-to-value ratio because of limited funds and have excellent credit qualifications, your lender may allow you to purchase mortgage insurance to offset their increased risk.
BASED ON INCOME
Mortgage lenders want to be assured that you will be able to repay the loan. Therefore, your Family Income will limit the amount of your mortgage. For a rough estimate multiply your total family’s yearly income by 2 to 2½.
For example, if you earn $25,000 a year, you can plan to borrow a maximum of $50,000 to 62,500.
Your family’s gross annual income … $_____________
Multiplied by 2 and 2½ … x 2 & 2½
Equals your maximum mortgage … $___________
to $___________
Maximum Monthly Principal & Interest Payment (P&I)
Lenders also calculate the maximum amount you can safely spend each month on P&I payments to decide the maximum mortgage for which you will qualify. Lenders establish the percentage of a family’s income that can safely be allocated to paying their housing cost. The percentage is based on factors such as credit worthiness and employment history. The housing cost includes taxes, insurance, and P&I payments.
For example, a typical percentage of 28 and that same $25,000 income establishes a maximum housing cost of $7,000 per year. Subtracting $1,000 for taxes and insurance leaves $6,000 (or $500 per month) available to pay P&I.
Your family’s gross annual income … $_____________
Multiplied by 28% … x .28
Subtracting yearly taxes & insurance… -___________
Divided by 12 … ¸ 12
Equals maximum P&I payments … =$___________
Your Family’s debt obligations may further restrict your P&I payments. Add up your debt obligations for the next year, eg.: car payments, credit card debt, child support, etc..
Multiply your annual income by 36%, then subtract your long term debt payments to obtain your maximum yearly housing costs, then divide by 12.
Your family’s gross annual income … $_____________
Multiplied by 36% … x .36
Subtracting long term debt… -___________
Divided by 12 … ¸ 12
Equals maximum P&I payments … =$___________
If this is less than the previously estimated P&I, it may be to your advantage to reduce your obligations before applying for a mortgage. Assistance from relatives may be of help on this as long as you are not adding another obligation for the lender to consider.
BASED ON P&I PAYMENTS
Knowing your maximum P&I payment and the interest rate that is available, you can determine your maximum mortgage. Use the 30 year or 15 year chart on the next page. Go down the column that matches your available interest rate until you find the P&I payment that most closely matches yours. Then read the maximum mortgage amount in the left column.
Your maximum mortgage was also calculated on pages 12 and 13. The factors that produce the lower maximum mortgage are the things you need to improve to qualify for a larger loan. Shop for a better loan-to-value ratio, reduce your debt, and increase your equity, available cash or income.
ESTIMATED MONTHLY P&I PAYMENTS FOR 30 YEAR LOAN
7% 8% 9% 10% 11% 12%
$25,000 167. 183. 201. 219. 238. 257.
30,000 200. 221. 241. 263. 286. 309.
35,000 233. 257. 282. 307. 333. 360.
40,000 267. 294. 322. 351. 381. 411.
45,000 300. 331. 362. 394. 429. 463.
50,000 333. 367. 402. 439. 476. 514.
55,000 367. 404. 443. 483. 524. 565.
60,000 400. 441. 483. 527. 571. 617.
65,000 433. 477. 523. 570. 619. 669.
70,000 466. 514. 563. 614. 667. 720.
75,000 500. 550. 603. 658. 714. 772.
80,000 533. 587. 644. 702. 762. 823.
85,000 566. 624. 684. 746. 809. 874.
90,000 600. 661. 724. 790. 857. 926.
95,000 633. 698. 765. 834. 905. 978.
100,000 666. 734. 804. 878. 952. 1,029.
ESTIMATED MONTHLY P&I PAYMENT FOR 15 YEAR LOAN
7% 8% 9% 10% 11% 12%
$25,000 225. 239. 254. 269. 284. 300.
30,000 270. 287. 305. 323. 341. 360.
35,000 315. 335. 355. 376. 398. 420.
40,000 360. 382. 406. 430. 455. 480.
45,000 405. 430. 456. 484. 512. 540.
50,000 450. 478. 508. 538. 569. 601.
55,000 494. 526. 558. 591. 625. 661.
60,000 539. 574. 609. 645. 682. 721.
65,000 584. 621. 660. 699. 739. 781.
70,000 629. 669. 711. 753. 796. 841.
75,000 674. 717. 761. 806. 853. 901.
80,000 719. 765. 812. 860. 910. 961.
85,000 764. 813. 863. 914. 966. 1,021.
90,000 809. 860. 914. 968. 1,023. 1,081.
95,000 854. 908. 964. 1,021. 1,080. 1,141.
100,000 899. 956. 1,015. 1,076. 1,137. 1,201.
