Most log home buyers finance their purchase. The tax write-off alone makes getting a mortgage enticing even for those rare few who can pay cash. But how do you determine how much house you can afford, and how much of that will come from the bank?
When you’re ready to buy your log home, calculate your target budget by adding your assets and how much you can borrow. It’s that simple. However, even though interest rates are still hovering at historical lows, the days of “no money down/no equity required” and so-called “exotic loans” are long gone. Like everyone else, banks need to protect their investments and doing so means reducing risk with sizeable down payments and proof of real collateral.
“Money is still readily available for qualified buyers,” according to log home mortgage specialist Tom Coronato with Citizens Bank. “A lot of these loans are going to be more lender specific or portfolio based, meaning that the banks that grant them and service them are one and the same.”
In other words, the bank is carrying the full risk. Lending expert Greg Ebersole with BB&T agrees. “The idea that qualified borrowers have been rejected is a lot of media hype,” he says. “I’ve never seen a qualified customer not be able to obtain a mortgage. The real difference now is that we need a lot more documentation than what was required in the past.”
“Log home loan applicants are a little different, because we typically have a well-educated, sophisticated buyer; but often we find they still have difficulty with the basics and don’t understand why we have to ask for so much information,” Tom explains. “They think they can leverage their relationship with a bank or get a light-document loan, but TRID changed all the rules.”
Once you have what it takes to qualify, financing proceeds. If you are purchasing a pre-existing log home, the process mirrors every other kind of home loan. But if you are like most log home buyers, the biggest difference from a conventional loan and yours is the fact you’ll need two. One is the standard mortgage, ranging from 15 to 30 years. The other is a short-term construction loan.