We are in the process of securing financing for our log home in Pa . We are working with one local bank that we need to get our builder on their "approved" list and wants to make sure they can work with the manufacturers draw schedule. I have been shopping around checking all our options. One local bank told us there is NO Way we will get financing for our home...from any bank..because of the appraisal process. Does anyone have any suggestions on a company that would be comfortable to work with log homes. We have 15 acres that we only owe $9K on and we have it cleared, put the driveway in, septic and ran the electric trench. We have all our blueprints and permits for the house. We are looking to borrow about 220,000. It blows my mind that we wouldn't have enough collateral. There is no way they are going to find comps that have sold in the are in the past 3 to 6 mo. Help!!
A difficult problem as no matter how much work is done the house will be worth, according to an appraisal, far less until it is 100% complete.
Something I have in my contract and you could try is an escrow account. See if the bank will pay the money according to the schedule into a lawyer's escrow account which the manufacturer can only draw upon delivery. That should satisfy the bank that their funds are secured.
Of course it will cost you more. The manufacturer will now have to fund and possibly borrow to see it through to delivery. You should expect some extra charges because of that.
Its not the best solution but maybe the only option you have with the U.S housing market in such a shambles and every lender scared to take any risk.
And if the company you selected won't go for it call me. I guarantee it will be a better log package.
Khita Log Builders Ltd.
I use a lender that would have no problem with the comps or the payment on delivery but I'm not sure if they lend in PA. I also have a contact at Citizens Bank in PA that specializes in log home financing. if you would like any of those contacts, let me know.
I never have any luck with Local Banks... they just don't understand any kind of package whether it's log, modular or post & beam.. Plus I don't work with banks that use "approved" builder lists, to me that's a red flag for trouble on my end.. but that's just my opinion.
Michele, Your story is being told throughout the country right now and it almost seems to be getting worse. I would keep looking and would look at the National Banks rather than local as they have "your" money to loan you.
I had heard that Wells was still making construction loans as was BB &T.
In Maine, we are all about local banks (they did not fall into the forced banking collapse).
If you have got good credit, conservative financial record...the local bank is where you really should be.
20% down always (its just plain prudent).
I just recently purchased a parcel of land with a local bank, put 20 0r 25% down (can't remember), got 5% fixed rate mortgage (which is good for raw land around here)...and the first thing the loan officer said to me was;
"we are going to do your construction loan too, aren't we?"
Of course I am really "cheap".
I guess it depends on where you live.
If you don't mind my asking, where at in PA - eastern, central, western? Reason I ask is I'm in eastern PA and may have a few suggestions for you.