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. Many years of working with lenders has taught us a thing or two, such as who to talk to, what needs to be sent where, and the special areas of the industry. 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 be thinking about and areas of concern for most lending institutions.
Log home financing vs. stick built home financing: Over the last twenty years or so, the log home industry and the financial institutions providing services for log homes, have seen a dramatic shift. While some lenders simply wouldn’t finance log homes years ago, many of them 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 when it comes to log homes, the biggest issue seems to be appraisal values. Unfortunately, banks tend to value homes from those recently sold in the area in which your home is going to be built. While log homes may not cost a great deal more than conventional homes, the value of the home for appraisal is almost always more than conventional homes. This makes the homes around your property a liability, and can also make your home value appear lower at the time of appraisal.
Financing a Log Home Build:
- Research your building area for lending institutions and those familar 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 actually 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 highly organized will make the lending official much more likely to consider you less of a risk.
There are several very good resources available on these topics, but one of the best is written by Kevin Daum. His book, Building Your Own Home ….for Dummies is a great resource for those less educated in the ways of the banking industry.
Please feel free to contact us, should you need any assistance.