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Financing Log Homes

Financing for log homes can be a little more complicated than financing for regular homes. It is difficult for lenders to compare log homes to other houses in the neighborhood (to determine finished value), since log homes are still rare, especially in urban and suburban areas. The value of finished log home may be different than the value of the finished house of similar square footage. Lending institutions that are unfamiliar with log homes may have some reservations about financing them.

Though log homes are not the same as regular homes, many banks are gaining more experience with them as they become more popular. Log home manufacturers are experienced with the log home business, and they may be able to direct you to banks that are supportive to financing log homes. There are some major lending institutions with programs designed specifically for log homes, so you may want to check several banks within your area to find out who has experience with them.

What to Expect

Jim Cooper, in Log Homes Made Easy, wrote, "In order to secure financing, lending institutions must assign a value to your project. They will then lend a portion of that amount, depending on factors like economic conditions, your financial situation, and their perceived risk" (76). (Financing log homes is described in more detail in Cooper's book).

How to Prepare Yourself For Financing Your Log Home

Before you go to the bank, there are some things you'll want to do.

Figure out how much you make annually and how much debt you carry. That's what's going to determine how much money the bank will allow you to borrow. This also help you be realistic about your log home. Remember, unless you happened to inherit some land, you'll need to take into account the purchase price of the land, too.

Next, get quotes from several reputable log home manufacturers. The very wary of anyone who promises you that building your own log home, whether from scratch or from the kit, will be cheaper than buying a house. Chances are, you'll spend at least as much as you would buying a house of equal square footage. However, all other things being equal, log homes tend to increase in value faster than similar sized houses in their neighborhoods, so don't let building costs deter you too much. A log home can be well worth the extra work. And they sure look great when they're done!

Source: Log Homes Made Easy