Dean Loux
American Log Mortgage
Log & Timber Frame Division
American Way Corporate Center
3840 Hempland Road
Mountville, PA 17554

Phone : 717-285-6612
Fax : 717-285-6413
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American Log Mortgage
Div. of American Home Bank, N.A.
877-BANK-AHB
(877-226-5242)
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IMPORTANT LOG HOME FINANCING
TIPS ON APPLICATION, APPRAISALS AND SCHEDULING DELIVERY

American Log Mortgage wants to provide you with the best possible service. We have prepared the following tips to help insure the process runs smoothly. Please take a few minutes to read the information below. Thank you!!!

Application – an interview takes place between the borrower(s) and an American Log Mortgage loan officer. A detailed credit report is ordered and the application package is printed and mailed to the borrower(s) for signatures and documentation verifying income and assets. We recommend that the borrower(s) start the process 60-90 days prior to the start of construction to make sure their loan is in place PRIOR to any construction starting.

Registration – when the loan officer receives the applicant’s fully executed and documented application package from the borrower(s) the loan is then registered and submitted to underwriting for approval.

Approval/Denial/Suspension – typically takes about three (3) business days after the loan is registered. Upon approval, the customer will receive a CONDITIONAL Commitment letter in the mail to let them know they have been approved financially. The Commitment letter will list conditions that must be satisfied in order to settle/close the loan. In case of denial, applicant will receive a notice explaining reasons that the loan application does not meet underwriting guidelines. A suspension means the underwriter requires additional information in order to make the final loan decision.

Construction Documentation – once the loan is approved financially, the next step is to order an appraisal. The appraisal can only be ordered once the borrower has all of the required documentation that an appraiser will need. The borrower will need a contract or quote for their log package, a contract or quote from a general contractor for the total construction cost, and a set of plans (keep in mind that no major changes that affect the appraised value should be made after submittal of the plans). Depending on how organized the borrower is prior to applying, gathering the necessary documentation for the appraisal may take as little as a day or make take several weeks.

Appraisal – upon receipt of all construction documents, the appraisal can be ordered. Most current appraisal turn around times are between one to three weeks. Appraisers are independent parties, not associated with the bank. As a result, we cannot control the amount of time for appraisal completion.

Log Home Comparables – we will not require log home comparables. Therefore, if you are building in an area where there are no other log homes or there are no log homes that have sold in the past twelve (12) months, we will be able to accept other construction types that are considered similar in quality and appeal (as long as they meet standard appraisal and underwriting guidelines). If you plan to refer your own appraiser, it is important they understand that we will not limit their search for comparables to only log homes.

Appraised Value Financing – appraised value financing allows you to take advantage of any equity in the property that is provided by the value of the lot, market area, etc. Appraised value financing may lower the amount of down payment required by the borrower

Appraised Value – as with any custom home (site built stick frame, timber frame, log, modular, etc) the property may not appraise for as much or more than the cost of construction, if the borrowers are over-building for their real estate market area. The appraiser needs to find comparable properties find comparable (similar square footage, similar style, similar acreage, similar amenities) that have sold in the immediate area with the recent twelve (12) months. If there are none available, the appraised value may come in lower than the cost of construction. The cost of construction does not directly relate to appraised value for a market. If the appraisal comes in low, the borrower may need to pay out additional funds to make the project work. If you are unsure about the market where you plan to build, contact an appraiser and discuss the project. They can let you know if it will be problematic to complete an appraisal due to lack of recent comparable sales. It is better to address these issues in the beginning/planning stages.

Construction Draw Schedule – After we receive and approve the appraisal, a draw schedule is developed by our Construction Department. We prefer that the general contractor supply a proposed draw schedule in the construction contract. Also, in order to prepare an accurate draw schedule, we will need copies of the signed sales agreement/contract from the log dealer or manufacturer (signed by dealer or manufacturer, borrower and co-borrower), proof of all deposits paid to dealer or manufacturer (if applicable), contract with General Contractor for labor and materials allowances to complete your home (signed by the contractor, borrower and co-borrower), and proof of all deposits paid to General Contractor (if applicable). When the draw schedule is completed, it will be faxed and/or emailed to the borrower and general contractor for review and approval. Revisions to the draw schedule are acceptable prior to loan settlement.

Scheduling Settlement – Our final step is to schedule the loan settlement. Upon approval of the appraisal, we can normally schedule the loan to settle (close) within 5-7 business days. Prior to settlement, all conditions on the Commitment letter must be cleared. The final items to be completed are normally the final draw schedule and the builders risk insurance. After the loan is closed, work can commence. Any work started prior to settlement may prohibit the title company or attorney from issuing clear title insurance and prevent us from closing the loan. If you have started work on the property, contact your title company to see if there will be any problem getting clear title.

Scheduling Log Delivery – It is important that you, your log manufacturer or dealer, and your general contractor understand that no funds can be disbursed from the loan until after the loan is settled (closed) and a building permit is in place. Therefore, please make sure the loan settlement takes place prior to any scheduled deliveries or required deposit dates. Please make your loan officer aware of your anticipated delivery schedule and the date(s) that deposits are required. Communication is key to insuring that delivery of your log package is not scheduled prematurely.

 
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