When planning for the financing behind a new home building project, a buyer has a variety of options available to them to help mitigate the various financial risks of the project itself. Specifically, because of the way in which a new home building project faces so many different possible failure outcomes as a result of poor planning, or setbacks to the project that will require additional funding, a buyer stands to benefit a great deal by taking the time to break the project down into a number of financing stages, which will limit their exposure to debts into discrete units of obligation.

The easiest way for a consumer to break down their new home construction project into discrete borrowing units is to look at the tangible aspects of property that go into the project itself, and determine how it is that they contribute to the project in terms of their lendability as collateral. For starters, we can look at the raw land underneath the property as a tangible unit of collateral that can be borrowed against independently.

This means that a buyer can finance the purchase of the raw land through debt before making an obligation to start the project itself. From there, the buyer is able to take as much time as they’d like before they start the financing agreement for the actual build itself, and can therefore make sure that they are in a position to move on the project without fear of losing the location itself to another buyer. Read More →

When starting the new home construction process under a draw mortgage plan, there are a number of possible setbacks that can crop up over the course of the building year that can cause some serious impediments to the project itself.

Simply because of the heavy involvement of the financing bank in the project, and the risks associated with engaging such a large project as building a new home, a buyer needs to make sure that they have planned in a way that keeps them aware of all the short-fall risks that can impact their purchase. Most importantly, new home builders need to make sure that they are in a position to actually complete the construction of their home, or risk losing access to financing part-way through, and therefore wind up with nothing but a partially completed lot that cannot be lived in.

By far, the greatest risk associated with building a new home is the risk of a ‘shortfall’. Shortfall risk is the risk that a construction project may fall behind in its completion schedule, which means that the project would require additional funds to complete a particular stage of the project. For example, if the process of digging a foundation for a new home build takes a bit longer than initially planned for because of frozen soil, the construction company involved would require additional funds to continue with that particular stage of the project. Read More →

With interest rates as low as they are today, home buyers are finding that they have more and more options available to them when they are looking to find their dream home. Between condo projects, town-homes, duplexes, bi-levels, acreages, and family homes, the average home buyer is in a unique position to be picky about exactly what features come with their properties. This characteristic is epitomized by the increasing availability of customized home solutions, in which a buyer can contract out the construction of a house that meets their exact design specifications.

While this option would normally be considered to be extremely costly, and somewhat unnecessary in light of a renovation, the availability of cheap mortgage financing in today’s economy is opening up this opportunity to more and more consumers. By then simply taking the time to understand what our financing options are for building a new home, a consumer can start planning around their new home construction goals.

By far, the easiest way for a buyer to finance a custom built home is through a program that allows the buyer to forward funds upon completion. These programs are generally run by larger manufacturers, which have the capacity to start a construction project without more than a deposit from the buyer. In general, a builder will require a buyer to put 5% of the final purchase value down upfront, and then they will begin the construction project. Read More →

When looking at all of the opportunities associated with investing in international opportunities, it is important for personal investors to remember how it is that these potential returns come in hand with a variety of additional risks that are exclusive to that kind of position. Between the currency, interest rate risks between the two countries alone, a personal investor needs to be aware of which products can be used in conjunction with their foreign investments, so as to fortify the position over the longer term.

By far the largest risk associated with foreign investment stems from the fluctuations that occur between the different currencies involved in the transaction. For example, an American investor may realize a 9% nominal gain by holding funds in an Indian Certified Deposit, which is a reasonably safe investment in that country, and provides an extremely high comparative rate of return.

However, because of the way in which the inflation rate on the Indian Rupiah tends to exceed 10%/year against the US Dollar, the investor will actually lose money against the currency exchange rate, and walk away worse off as a result of the investment. Alternatively, if the investor has placed their money into a shared deposit in a country with an appreciating currency, such as the Czech Republic, the investor could walk away with an even greater return on the exchange rate. Read More →