Looking for ways to finance in a tough market? Although we've been hit with a nationwide housing slump, there are growing signs of a recovering market and this can be a great time to build a log home. Interest rates are down and builders are offering good rates and a fairly quick turn-around on construction.
Sometimes you have to be creative about how you structure the financing for building a log home. Here are 4 methods to look at for financing your cabin:
The most common method of financing your log home is using a log home construction loan. This is similar to conventional construction loans but it’s important that your lender is familiar with log homes. There can be key differences in payments and timing, especially if you're using a log home kit.
In addition to the actual construction loan you can save money by using a one-close loan or construction-to-perm loan where the construction loan automatically converts to a mortgage once the construction is finished. Visit our page on log home construction loans for more information.
Another method of financing your log home is if you are able to offer cash for your construction. You may be able to negotiate a better deal with your builder for financing your log home, but be prepared to establish a draw schedule so that you are only covering the amount of the total cost already used as the build progresses. You will save on interest payments and have a greater control over how you distribute the money.
Many builders are now offering to finance your project. They may offer traditional financing or they may do it by taking credit cards (and you get to keep the points) or even using PayPal.
Be aware that this is generally for smaller projects and may involve multiple transactions to get around your monthly limits. If you have a card that offers cash back or airline mileage that can be an incentive to go this route.
If you have been living in your current home for a while you will have built up significant equity in your home with your monthly mortgage payments. You can draw against this equity by taking out a home equity loan and using that money to deal directly with a builder.
It’s a good idea to set up a draw schedule and contract specifications with your builder so that they receive the money as they use it and you can verify each stage as you progress through the construction of your log cabin.
These are just 4 ways to finance your log home that are commonly available. Check with log home lenders for other ideas and to help with your specific project.