The Washington times., 1923-04-07
HOW 4 $4,000
HOME CAN BE
I FINANCED
Practical Aid Offered Those
Who Find Money-Raising
a Problem.

When man decides to build
his own home and thereby deliver
himself from the major and minor
ms that beset rent-paying he finds
it comparatively easy to decide
what type of house he wants,
where it is to be located and what
materials are to be used in its
construction.
Financing Problem.
But when 1t comes to arranging
FOR the financing of the new home
there's the rub! Too little is made
OF this overwhelmingly important
side of the proposition; most IN
tending homie. builders. when they
finally confront 1t, are totally un-
prepared to act wisely and expe-
ditiously. They haven't seen any
textbooks on the subject-although
voluminous textbooks might be
written-and only after going
through the actual process of finan.
cling a home do they begin to realize
the ms and outs of the business.
For the purpose of extending
practical aid in this connection to
the intending heme-builders who see
this page, it may be worth while
to outline the important steps in
SIC, ZOO program, /. E., to show as
cSncisely as possible. and with as
close regard for geographical price
differences. how a $4,000 home
might be financed and about what
Ii. would cost to maintain:
The first step is to select yoir
site. The second is to develop your
architectural plans to conform with
the site and the amount you are
willing to pay for the building it,
self. viz. $4,000.
Must Get Mortgage.
.-Eupposing that the site the land
BAelfD costs $4,000. The home
Builder then has a proposition in
S0lving a $4,000 capital sum. in
all.
His next step is to secure a mort
gage loan on the property COM
flete. That is, this win be the
hext step unless the home-builder
can, and wishes to. pay the out
right cost in the beginning. AS
most do not wish to proceed this
way, preferring to maintain their
cash resources, so far as possible,
undiln .nished let us assume that
our home-buiIder is one OF the ma
5ority and prefers the mortgage
route1
On a newly constructed home,
costing $4,000. and a plot costing
So. 900, it should not be difficult
to secure SIS per cent on first mort
gage. Assuming the house and
1b6 were held to be worth their
tbst to the builder l$12,0O0). a
total of $500 might be obtained
n, this way.
Get Second Mortgage.
..s-.There would then remain $4,000
which the home-buifder would
have to put up in cash, or else
secure fin part through a mort
cage agreement. Again assuming
the mortgage route to be prefer
rcd, so per cent of this sum might
be obtained via a second mortgage
Of $2,1O0.
Here it may be said that the in
fending home-builder need have
no quaIn1s or shivering regarding
ft1e ways and means of securing
This mortgage money. In the great
ma jority Of cases, the contractor
win attend to all the technical de.
taiIs in this connection.
Interest Requirements.
The home-builder will then have
the following interest charges in
prospect /tsubject to variation, ac-
eording to locality the first year:
per cent on LIST mortgage
= of $500 ............. $46S
per cent on End mortgage
of $500 ................ 126
Total .................. 1924
1t is customary to have the Sec
ond mortgage of a self-liquidating
nature. That is, aside from the
interest requirements, this mort
gage must generally be reduced
each year by a given amount. The
process Is known as "amortiza-
tion." Our home-builder will prob
ably have to amortize his second
mortgage at the rate of $500 a
year.
This sum will have to be added
TO interest charges in determining
maintenance costs.
Now, in order to maintain a
home Of his own, the home builder
viii have to undertake to meet Ger.
tain charges that he would not
nave to meet as a rent payer. They