May 1, 1996

We closed on our bank loan today. When we first meet with Hill's Bank the loan officer was impressed with how well organized we were. For the most part we followed the guidelines outlined in Log Homes Made Easy, Contracting and Building Your Own Log Home. We learned that the key to getting a bank to give you a construction loan is to sell the loan officer on your organizational skills. He or she must be convinced that you are capable of completing the project so the bank will not get stuck with a partially finished house because you overlooked something or ran out of money. The thing our loan office liked the most was our budget and in particular all the firm bids that were built into the budget to eliminate the unexpected.

One unpleasant surprise was the appraisal. The appraisal was only about 70% of the actual value of building the house and the cost of the land. The appraiser, in my humble opinion, really did a half baked job of comparing our house to similar houses in the area. Although the square footage was roughly the same as our house, very little else was. Since the bank will only loan 90% of the appraised value we ended up short by $32,000. I have since learned that it is not unusual for Log Home appraisals to be low and even wrote a letter to the bank explaining why the appraisal was ridiculously low, but the bank wouldn't budge. We could have protested the appraisal but that would have delayed everything so, at the banks suggestion, we took out a home equity loan on our existing house to make up the difference. In defense of the bank, I can understand their reluctance to loan above the appraised house value, but I would sure like to get my hands around the virtual neck of the appraisal company and shake some sense into them. <Sigh> Time to let this pass and move on with the project.

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