A notice about a new resource for log home construction loans caught our eye so we contacted Kristina Albright, Senior Vice President, The Federal Savings Bank, to learn about their Log and Timber Home Loans recently launched in collaboration with Log Home Living Magazine. Albright is well-versed in the intricacies of log home construction loans, having worked in the system-built homes sector since 2002.
Financing Designed for Log Homes
Log homes have historically been challenging to finance, simply because many lenders lack understanding of how log homes are built. “New construction as a whole has higher market values,” Albright explained. “With its two components of package and actual building costs, log home construction can be difficult to find conventional financing that will work.” She noted that over the years, pockets of log home financing have been available, but were often limited to small regions or on limited numbers of states. The Federal Savings Bank is an FDIC-insured bank and able to underwrite loans in all 50 states, including VA loans.
First Step: Get Pre-qualified
It bears repeating that like any home purchase, loan pre-qualification is the crucial first step to start on your Katahdin Cedar Log Home adventure. Once you have a pre-qualifying number your log home design can take shape within the budget of your construction loan amount. “Getting a construction loan pre-approval before you pick your floor plan can save both time and manage expectations from the beginning,” Albright noted. Many people who select a design package can be unpleasantly surprised when the construction and finishing costs are added on to the total.
Katahdin Cedar Log Homes makes sure that their customers are well educated about what is included in the package, with their dealer or sales associate providing figures for the construction costs. One note Albright stressed is that lenders prefer the borrowers have a general contractor for the construction phase, which will also help the process run smoothly.
Appraisals
Lenders now use a round-robin approach to assigning appraisals, so there is a chance your appraiser may not be familiar with log home construction. The Federal Savings Bank provides underwriting guidelines to the appraiser appointed to a log home appraisal to reference marketability questions that will affect the appraised value. Albright said. “There’s a wrinkle in appraisals in the current market as values have not always kept pace with new construction costs, including lumber, fixtures and other materials,” she explained. Because of the particular demographics of log home buyers, they may be in the position to pay the difference in the appraisal amount and final cost tapping into long term equity in their primary residence.
Log & Timber Loans are Different
Albright explained that Log & Timber Home Loans can accommodate the unique draws or payouts that log home construction necessitates. Katahdin Cedar Log Homes requires a 10% deposit at the time the log home kit is ordered. The 10% deposit occurs prior to final plans being drawn up. The balance for the log home kit is required at the time of the first log delivery. Explaining this policy in initial conversations with a lender will mitigate any pay out issues and ensure your home construction can proceed smoothly.
Additional Features
Because of the size of The Federal Savings Bank, Log and Timber Home Loans is able to underwrite loans for several different circumstances. With their unique understanding of log home construction, Log & Timber Home Loans can be a lending partner throughout the construction process. Other services include:
- Mortgages and refinancing for existing homes,
- Home renovation financing,
- Single- and Two-closing loans,
- Construction-to-permanent loans, and
- Jumbo loans.
When you’re ready to make you decision to build a Katahdin Cedar Log Home it’s good to know about the experienced lending team at Log & Timber Home Loans.
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