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This leads us to
next issue that pertains especially to building a log home. Normally, banks release a draw after
work has been completed. However, log home manufacturers require COD when
logs are delivered (or ideally
day before). Historically this had been a bone of contention between
banks and manufacturers, until certain banks took
lead and set up accounts directly with
log home companies. This expedited
whole process. These direct deposits become draws on your construction loan.
EXAMPLE: In our case, we ordered a total of 11 draws. On settlement of
construction loan,
bank started us with about $38,000 for misc. expenses. We used much of this to bridge
gap between draws (the contractors want to get paid regularly). There was a draw for
Log Kit deposit. There was a draw for our Superior Walls precast foundation (another direct deposit). Another draw paid for
COD log delivery; another draw paid for
window delivery. Then things got more tricky, because
next draw covered
well and septic, which had to be completed first. Once
log walls were raised another draw came, another when
"weathered-in shell" was complete, and another draw when
mechanicals were installed. The last draw came at
end of
project, but
bank wouldn't release
money until we had stained
house and planted grass seed. They wanted to make sure
house was ready for sale.
With luck, you won't be delayed by weather or on-site errors, which could derail your whole plan. However, if you don't have some extra money set aside, your contractors might quit working until they get paid, knowing full well that you won't get paid until
work is finished. Coffee and donuts help to keep relations smooth, but nothing works like cash.
And remember: if by some miracle you don't use all
money you requested in
construction loan, you can always give
rest back. So don't cut corners. Estimate high, spend less, and you just might have enough left over for that luxury item you always wanted.

About the author: Mercedes Hayes is a Hiawatha Log Home dealer and also a Realtor in New Jersey and Pennsylvania. She designed her own log home which was featured in the 2004 Floor Plan Guide of Log Home Living magazine. You can learn more about log homes by visiting www.JerseyLogHomes.com.