financing a log home

Replies to This Discussion

Permalink Reply by Tim Bullock on May 2, 2009 at 5:44pm

Neil and Holly, Welcome to the neighborhood.....This is my personal views only and free advice is worth exactly what you are paying for it......I do not know Suntrust but should you run into construction problems ie....lots of rain....9 months might be a little tight....what happens if you don't complete in that time frame? I wouldn't put any money into the property until ALL of the financing is in place........you will not get any credit for putting in the driveway.....It is better for you to hang onto every penny as this would be your reserve and might be needed at the other end of the project. Now vs whenever? That is a difficult question as mortgage rates are good and it is likely the best time to build in terms of costs but will it might get better 6 months from now? My crystal ball is cloudy these days......there are some very desperate builders out there but they may not have the financial wherewithall (sp) to complete so please be aware....Good luck with whatever decision......

▶ Reply to This

Permalink Reply by neil & Holly on May 3, 2009 at 7:25pm

Thanks for the reply Tim.As this is a dream of ours that is going on many years now,I,m not going to make any fast decisions.It took us years to find the land & if it takes a few more to make this happen thats fine with us!We are going to cut in the road at the end of the month as there is no way to get into the property right now.I call it a road because its going to be about 450 ft. long & where we live now our driveway is about 50 ft,about the average here on Long Island.We have the local electric utility meeting us as well so he can check out putting in power some time this summer.It all ties in with keeping the dream alive!

▶ Reply to This

Permalink Reply by Randy Esposito on May 3, 2009 at 7:30pm

Have you tried M&T Bank or American Log Mortgage? Both specialized in mortgages in log homes.

It is harder now as new appraisal rules state that a new appraisal has to be done if the home is not finished with six months of the first appraisal. So a lot of local banks are cutting their the length of their construction loans.

▶ Reply to This

Permalink Reply by neil & Holly on May 3, 2009 at 8:15pm

Yes we called both of these banks & heres what they told us:

american log mortgage wanted 20% down payment in cash for a second home loan

M&T isnt making mortgage loans in the state of N.C. at this time.

It seems that banks arent taking too many chances these days!Suntrust would let us use the property as the down payment & they wouldnt make us pay mortgage insurance.This means that until you pay off a certain % of the loan,you pay it until you would reach the down payment amount.I also talked to some local banks & they are all pretty much saying the same thing.Who knows maybe it will loosen up some soon.

▶ Reply to This

Permalink Reply by Michael O'Leary on June 5, 2009 at 10:29am

Will M&T give loans in CO?

▶ Reply to This

Permalink Reply by Michael O'Leary on June 5, 2009 at 10:29am

Will they give loans in Colorado?

▶ Reply to This

Permalink Reply by Glenn V on June 16, 2009 at 9:26pm

Michael, M&t has an 888 number you could call also a quick contact form you could fill out on their website.

▶ Reply to This

Permalink Reply by Mike and Susan Hedden on June 17, 2009 at 9:12am

Hi - Some good advise has been given - but depending on the size of the home you have in mind to build, I would be very concerned about a 9 month schedule in North Carolina. Many factors will come into play that will cause delays. If you are getting a construction loan, they typicall have a penalty if its not converted to a mortgage loan within the desginaged time frame.

Take your time as you have done so far and make sure you have everything lined up before finalizing the mortgage. If you are getting a log home package make sure you dont have it shipped for delivery until the contractor (if you are using one) is ready for the material. You dont want all that material sitting around in the weather even though its covered.

Also, check with the local building codes about what pre-inspections are required for your area. Some areas in NC have a long wait for the perc test and the environmental impact inspection. This may have changed with the slow down in construction.

Having a reserve fund is crucial - there will be overruns in cost.

▶ Reply to This

Permalink Reply by Donald Parsons on June 17, 2009 at 9:42am

Neil & Holly: One of our homeowners had a horrible time with SunTrust and is still fighting with them several months after completing the home. Not sure of the situation but the homeowner is NOT happy with them. I agree with the others, 9 months is a tight schedule and typically your time starts the day the loan closes (not from the first check) so your timeline has little room for error or delays. Keep looking for your best construction loan "deal" and make sure the bank, the builder, any sub-contractors, you and the log home manufacturer all agreee on the draw schedule so there are no surprises along the way. Keep everyone posted on your progress and have a GREAT time building your log home. Cheers - Donald

▶ Reply to This

Permalink Reply by Terry & Shelley S on June 17, 2009 at 11:22am

Hi Neal & Holly! Welcome! Great advice you've received so far! That's what I love about this neighborhood. I'm not sure about Suntrust. Are they a local bank in the area you're planning to build? Are you planning to use a local builder/contractor? Sometimes, when you use local folks, part of the approval process is already done for you as the contractor & bank are already familiar with each other. As a matter of fact, we used the local bank (UCB) as a referral source when interviewing potential builders. They allow 300 days (approx 10 months) from date of closing to finish the home & they'll use the value of the land as part of the 20% down payment.

When we purchased our land, the house site, driveway, and septic permit were already inplace. At the suggestion of the inspector, we had the septic tank installed last year shortly before the permit expired. After viewing our building site, each builder gave us a construction completion range of 6-9 months depending on weather, etc. We know this is general and things will happen to delay but because we've chosen a builder/bank that have done this together before, they know what to expect from each other in handling issues/problems when they arise.

We, too, plan to move to the area prior to building. This way my husband can be onsite as much as possible to 'supervise'. I'm not sure at this point if it's a good thing or not knowing him to be the perfectionist he is. I'm keeping my fingers crossed.

Hope this helps. Good luck to you!

▶ Reply to This

Permalink Reply by neil & Holly on June 17, 2009 at 8:50pm

Yes this group has some great advice.We are checking out local builders as well as the banks that they deal with.I think this is very sound advice.We were down to the property last month To start cutting in the access road and right now it is almost finished.Next comes the electric,hopefully by the end of the summer-that isnt here yet! One thing that we have learned is not to move too fast as these things take time.We took some pics. of the land clearing job & will post them soon.

Thanks everyone for the help

▶ Reply to This

Permalink Reply by Wes on June 17, 2009 at 5:24pm

Does the 9 months include weather delays? We started construction on our cabin June 2008 by clearing the land and excavating the hill to build into. In September the first snows came, didn't last but a few days. By the end of October, 4 months later, we wrapped up the cabin until this spring. Now we are back up to finish it.

Some banks do put a time constraint on construction, they do not want to see a long drawn out process.
They want protection for the money they give you. They may also have their inspectors come to visit your construction site and they may charge you for the trips. If their inspector decides you are not making sufficient progress they may charge you a fee (fine) to get things moving.

We took out a 'new' mortgage on our existing mortgage free home to cover some of the costs of building our cabin, but mostly we put a lot of our savings/retirement fund into construction. With todays financial market we are probably getting a better rate of return than our 401k's.

▶ Reply to This