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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.