Buy a turnkey dream cabin or take a chance on a fixer-up­per?

Cabin Living - - Front Page -

The ques­tion is a fi­nan­cial as well as an emo­tional one. In ad­di­tion to the idio­syn­cra­sies of a cabin and its lo­ca­tion, banks will be in­ter­ested in the ap­praised value af­ter a re­model, says Tom Coronato, a con­struc­tion loan spe­cial­ist at Cit­i­zens Bank in New Jer­sey. That means do­ing your home­work about what the cabin re­quires and what it will be worth in the end com­pared to nearby homes.

As you ex­plore your op­tions — whether you’re look­ing to buy a fixer-up­per or a cabin that’s ready to go, or to buy land and build from scratch — it pays to find a lender fa­mil­iar with the area.

“If some­one finds a sea­sonal cabin, maybe one they cur­rently own or want to buy, and they like the lo­ca­tion, but maybe it needs an ex­tra bed­room or they need to fix a cen­tral heat­ing is­sue, we will do a com­bi­na­tion pur­chase and con­struc­tion loan,” says Tom Ko­er­ber, se­nior vice pres­i­dent of North- view Bank in Fin­layson, Minn. “Say you buy it in June, you have con­trac­tors come in July, Au­gust and Septem­ber to fix it up.”

An ini­tial con­struc­tion loan may be more ex­pen­sive or will have an ad­justable rate mort­gage, but a fi­nal loan can be had once work is com­plete. Coronato sug­gests go­ing to a lo­cal builders’ as­so­ci­a­tion, which can re­fer rep­utable builders who will give true es­ti­mates of what a cabin needs to be con­sid­ered a three-sea­son or four-sea­son dwelling. That will help de­ter­mine the fi­nanc­ing re­quired for the job and let the bank know how much the fi­nal prod­uct is worth.

“The ones that are tough are emo­tional,” he says. “Home buy­ing is 90% emo­tional, but you have to take the emo­tion out of it to really get the facts. As a lender, how close can I get to the af­ter-im­proved value, that fu­ture value that we can de­ter­mine to­day?”

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