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You’ve always dreamt of a log home. You’ve attended the log home shows, read the log home magazines, picked out your floor plan design and you’re doing things to save money.
Now all you need is the log home financing. Should be simple, right?
Well, considering today’s mortgage crisis… wrong!
Below, I summarize our personal experience with log home financing, as well as provide information and tips that will hopefully help you finance your log home.
Money Talks
When my husband Greg and I started this process, we knew that cash was king!
Greg is self-employed, and I was a 100% commissioned real estate broker.
It was going to be a little more challenging for us, as opposed to a straight salaried worker. We had to save over 20% for a down payment and other incidentals that might pop up.
Start With Your Current Lender
At the time, Countrywide Mortgage was the lender on our current home, so we naturally turned to them for our log vacation home. We felt reassured with our credit history that the process would go smooth. But they ended up being the company in the biggest crisis.
We knew something was wrong when time and time again they kept asking us for more information and the documentation was never satisfactory. (My husband provided 8 years of W2s and bank statements.) Eventually, we realized that they just could do it.
Fifth Third Bank Finances Some Log Homes
Greg happened to talk to a banker at Fifth Third bank (someone not normally associated with financing log homes), and they suggested we contact the branch local to where we were building our log home.
Even though that branch wasn’t experienced in financing log homes, they were able to adjust to our specific requirements for the construction loan, and we got our approval in less than 2 weeks.
They required us to hire a general contractor. In retrospect, I wish I could’ve gotten my builder’s license and met the requirement for us to have GC’d the project ourselves and save money, but it all worked out.
Our log home provider (Hiawatha Log Homes) was able to answer all of Fifth Third’s questions and fulfill their requirements to help our approval. Hiawatha even adjusted when they would receive final payment of our log home package. Typically, like most log home companies, they require the rest of the payment of the log package itself upon delivery. But Fifth Third needed a few days so they could send a person out there to verify we received the materials — no problem!
We did have to have an appraisal done — which was difficult in our area as no new log home had been built within the past 3 years — but they did end up using those comparables. Additionally, we had to open up a bank account with that branch.
Other Avenues To Consider
Based on our experience, I would suggest trying the local branches to the area where you are building to get that more personalized review. It’s definitely worth a shot!
There are other companies that specialize in log home financing. Of course, they are a little tough right now with today’s market, but if you have an excellent credit score and a nice down payment, they are worth considering:
When I asked Keith Hopper of Fifth Third bank in Petoskey, Michigan what someone can expect trying to obtain financing for their log home in today’s times, he stated:
The conforming mortgage world ($417,000.00 or less) is still available to finance log homes. Above the $417,000.00 mark, we have a problem. The Jumbo market is not willing to take on log home financing at this time.
With this said, consider the cost of your log home project and decide if you can proceed forward. We are in turbulent market times right now, but I would suggest exhausting all your avenues before putting your log home dream on hold. Good luck!
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My husband and I both dreamed of owning a log home one day. To us, the log home represented a return to the simple life — a connection with nature and really just a lifestyle. After 4 years of dreaming, planning, attending log home shows, and cutting pictures out of log home magazines, we finally realized our dream of building a log home in northern Michigan.
