FAQs About Financing a Log Home

Three FAQs About Financing a Log Home

If you’re not walking into your new build as a cash buyer, you will need to obtain financing for your log home. While some of the lending process is the same as conventional construction, there are a few unique aspects to securing a log home loan that differ from traditional custom-home builds. We are sharing a few frequently asked questions about log home financing, so you can navigate the lending process with confidence and be on your way to enjoying your new Ward log home.

     1. What lender should I use?

Here at Ward Cedar Log Homes, we have a network of lenders who have experience financing log homes and can help you take the next steps towards your dream. You may also be able to work with your personal banking institution, as lenders are becoming more educated on log home financing. “A lot of times, we find that our buyers will have much success with the local bank they have dealt with for years,” says Ward Director of Sales Ron Silliboy.

     2. How does the loan process work?

When building a log home with financing, you will typically need two loans: a construction loan that you will pull from during the building process and a traditional long-term mortgage. (If you do not own your land, you may also have a third property loan.)

While most people are familiar with the ins and outs of a long-term mortgage loan, the construction loan is more of a mystery. In a nutshell, it is a short-term loan that will allow you to pay for your home’s materials, such as the Ward log home package and labor during the building process. To secure this type of loan, the lender will want to examine all aspects of your log home plans, including your Ward purchase agreement, a construction timeline and a payment schedule, as you are only allowed a certain amount of “draws” on the funds as each phase of your build is completed. The loan period will typically range from 6-18 months, and you will pay only interest on the amount of funds used as they are dispersed.

One important note: Like a conventional 15 or 30-year mortgage, the construction loan requires a 20 percent down payment, but keep in mind, your Ward log package also requires 25 percent down. “What the banks will usually do is count that some of that 25 percent down on the log home package towards the 20 percent on the construction loan,” explains Ron.

     3. Do I need cash for unexpected expenses?

Having a solid budget is essential, but part of building any custom home is expecting a surprise or two along the way. Whether it’s dealing with weather delays or hiccups with your crew’s scheduling, these unexpected developments can affect your bottom line, so having room in your budget — known as a “contingency reserve” — will help you cover issues as they arise. “You will have the peace of mind that you won’t run out of money to finish the project,” Ron says. “With financing, as with all parts of building a log home, our goal is to help educate our clients through the process.”

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