Saturday, February 6, 2010

Construction Loans

So, we've been rolling merrily along, firming up pricing, in order to finally apply for a construction loan. What I've found is that there are very few banks in which will provide new construction loans for single-family homes. This isn't very surprising, but it is a concern nonetheless. What is surprising is that Abraham had found a lender that specializes in financing the construction of modular homes. This company, based out of Minnesota, is called Land Home Financial Services Inc. ( They offer a "One-Time Close" which modifies the construction loan into a permanent mortgage at completion. While this sounds perfect, it doesn't look like we will have a lot of opportunity to shop around for rates, so we are hoping that Land Home is competitive.

I did call Land Home and spoke to Jason Pachl who handles the territory that includes Illinois. He was very helpful. He said that the average time it takes to get approved for a loan is 30 to 45 days, so if we want to really start this project in March, we will hopefully get our final pricing in soon so we can apply with full knowledge of what the loan amount will be.

In other news, Jeff has bid our project out to several general contractors who he feels will be on board with what we are trying to achieve. We should get bids back in the next couple of weeks, so then I can announce with better certainty what the pricing will be. So far we are estimating that the complete home, including our fancy tastes (i.e. floating staircase, PV panels, high-end appliances, etc.) will estimate at $175/sf. Jeff still believes that the home could cost $125/sf if completed at the factory with their specifications and selections, so this can still be a model for affordable housing in the city. The nice thing is that it can be modified to the owners specifications if they (we) are willing to foot the bill. I still think $175/sf, if that's a solid number, is pretty amazing for all that we are going to get!

By the way, we were interviewed by reporter Lisa Skolnik for a piece in the AIA's monthly trade magazine's March issue. Once it comes out, I will certainly post here. Very exciting!!

1 comment:

  1. I just found your blog and I can't tell you how excited I am to be able to live vicariously through you and read all about your house-building adventure. I've been dreaming of building my own place in Chicago for years and I'm so glad someone out there is taking the plunge and sharing all the ups and downs with the rest of us. I'd really love to talk to you more about your experience some time.