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Thursday, 05 January 2012 16:43


How Log Home Dreams Become Reality

By... Steve & Melinda Ryan, Colorado

You have driven by that beautiful log home hundreds of times wishing that one day you too can own one.  Now that the seed has been planted, how do you decide if a log home will fit into your budget?  This article will serve as a guide on how to achieve that dream of owning a log home. Before you start searching for a log home company, there are several things to you should think about: what features you desire in a home, the log species and profile that you like, and how much of the building you are willing to do as well as a price range you are willing to spend on your log home (built to completion with or without land included).

The first step in making your dream home become reality is to choose a log home company. Easier said than done because there are hundreds of log home companies competing for your business. We researched about fifty different log home companies before we made our decision and yes it was time consuming but you need to find the company that best fits your needs. To narrow down the list of companies to choose from, decide on the log species (i.e. White Pine), log profile (i.e. round), size of logs, type of logs (kiln-dried, dead standing, air dried, green), and the building system that you like the best.  Another way to narrow down the list is to tour log home models built by different log home companies and, if possible,  tour the log home mills themselves.  Now you need to submit a sketched floor plan of your dream home to the companies that you have chosen and obtain a log home package cost estimate that includes a shipping estimate.  When comparing price quotes from these companies make sure you are comparing "apples to apples", meaning each companies' log home package is slightly different than the other. Choose the package that best suits your needs and price.

The second step is to decide how much "sweat equity" you are willing to put into your home.  The more that you are able to do yourself means the more you will be able to save in labor costs.  How much does it cost to complete a log home depends on the labor rates in your area.  Most log home companies can quote a turnkey price (completely built home, ready to move in) as well as just the log home package price.  Research different labor rates in your area as well as building materials that are not included in your package and compare these costs to your turnkey price given to you by the log home company.  Ask your log home company if they can provide a list of area contractors. Being your own general contractor also saves money by subtracting about 10%-20% off the cost of building your log home, however you have the headaches that go along with that job.  If you decide to be your own general contractor,  you will need to develop a cost estimating worksheet with a breakdown of all the costs associated with building your home.

Is the price of your dream home still within your budgeted range?  If the answer is yes, then you can move on to obtaining financing.  If the answer is no, then there are some areas where costs can be reduced provided that you are flexible.  You may opt for more "sweat equity", choose a smaller diameter log,  reduce the size of your basement, or settle for less square footage to bring your price down.  It is typical when building your first home that adjustments need to be made in order to fit your original budget.

Finally, your cost estimating worksheet is done and you have your blueprints, now you are ready for financing.  There are quite a few lenders out there that specialize in log home financing which is slightly different than traditional stick built financing.  Again use the resources of the log home company you have chosen, they should be able to provide a list of specialized lenders as well as help you with the financial paperwork.  Do your homework before approaching a lender and the process will run smoother.  Most lenders offer a construction loan for up to one year and then required you to re-qualify for the mortgage loan after your home is completed.  Another option is a "One Time Close" loan which combines the construction and permanent financing into one easy loan.  One Time Close loans are nice because you only pay closing costs once and usually only qualify once for the loan.  These loans are usually given at a slightly higher interest rate during the construction loan period and can be "rolled down" at the time that the permanent loan starts.  When financing your loan, be prepared to have a down payment of 5%-15% of your loan value and in most cases you may use the value of your land as your down payment provided you own it free and clear.  Once financing is approved, you can begin building your dream log home.

Now you can let the seed grow into a beautiful log home that someone else will admire.  Keep in mind that the process of building your own log home is time consuming and Murphy's Law does apply, but the end result is rewarding.

Steve & Melinda Ryan, Colorado


Comments by

Over the years things have changed in the financial arena, however the procedural principles published in this article still apply. MLT
Friday, 25 February 2011 13:46

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