Is it possible to finance a Log Home project today? I’m happy to report that the answer is yes! Even with all of the doom and gloom surrounding the real estate market, there are lenders who have money and are willing to lend it.
Financing a home today is much different than it was a couple of years ago. Lenders are more cautious than in the past and now require all credit application information to be verified. At times, the amount of documentation that is requested may appear to be excessive. This is due to the conservative nature of lending today.
The biggest challenge lenders are facing involves property values. Lenders approve loan transactions based on the client’s credit profile as well as the property value. This value must be supported by an appraisal. Many markets are flooded with foreclosures and short sales which have driven home values downward. Lenders must insure your property is marketable in the event they must take the home back (foreclose). Knowing and understanding the market surrounding the property is critical. Here are some things that should be discussed with the lender up front:
- Is the size of home (square footage) in line with other homes in the area or will it be an over-improvement or an under-improvement?
- Is the cost of the home (land plus construction cost) in line with what homes are selling for in the area?
- Does the property include acreage and if so, how many acres? Is this amount of acreage typical for the area?
- Is the property zoned Agricultural and is there anything growing on the property?
- Are there other log homes in the area or will this be the first?
- Will this home include an alternative approach to power (e.g., solar)?
Be prepared to supply a lot of documentation and to communicate the specifics of the property with the lender. This will save a lot of time and frustration during the process.
Written by Paula Murtha, a Mortgage Consultant with MetLife Home Loans.
Contact her directly at 720-489-4891.