Tips on Log Home Financing

Here at Custom Timber Log Homes, we have a variety of local and national lenders with the ability and expertise to handle log home financing. Working with lenders for many years has taught us many things. Let us introduce you to a qualified lender who knows the ‘ins and outs of building a log home. If you aren’t local, we can typically help with one of our dealers across the country. Below is a simple list of things to consider and areas of concern for most lending institutions.

Log home financing vs. a stick-built home:

Over the last twenty years, the log home industry and the financial institutions providing services for log homes have seen a dramatic shift. While some lenders wouldn’t finance log homes years ago, many quickly adapted, learned about the industry and jumped on board to offer services. It is much more reasonable to find help now, and we can assist most people with this task. While there are still a few hurdles to clear financing log homes, the biggest issue seems to be appraisal values.

Unfortunately, banks tend to value homes from homes recently sold in the area where your property is located. While log homes may not cost much more than conventional homes, the home’s value for an appraisal is almost always more than traditional homes. So homes sold in your area can make the current market value of the homes sold around your property a possible liability and make your home value appear lower at the time of appraisal.

Things To Keep In Mind:

• Research your building area for lending institutions and those familiar with log homes.
• Try to pay off your land before getting your construction loan. Obtaining a construction loan is a bit more difficult if you already have a loan on your land unless you have excellent credit (sometimes even if you do).
• Borrow more than enough to build the complete log home project. If you set up the terms correctly, you will only pay interest on the amount borrowed. Not having enough money to finish the project is the worst possible problem.
• Be prepared for any meetings with lending officials. Just like interviewing for a job, first impressions count, and being organized will make the lending official much more likely to consider you less of a risk.
• Finally: Log Home Financing is much easier in today’s world and most financial institutions are familiar with them. If they aren’t, you might need to check for another institution.

Several excellent resources are available on these topics, but one of the best is written by Kevin Daum.  His book, Building Your Own Home ….for Dummies is an excellent resource for those less educated in the ways of the building and banking industry.
Please feel free to contact us should you need any assistance.