Knowing what you want out of a barndominium can sometimes be the easiest part of the whole process. While getting funding from a financial institution that is comfortable with your barndominium build, now that can be another story entirely. Banks and any lender for that matter will run for the hills when they hear the word barndominium. The reason is two-fold: they really have no idea what you mean when you say barndominium. Secondly, they don’t have the slightest clue how to start pricing out a loan with no other barndominiums in the area to compare to. The lender will politely tell you that the risk for the institution is just too high on a project like this, and without a builder, the risk is especially high.
To put the bank and loan officer at ease, we aren’t even going to use the word “barndominium” in fact, anywhere we would say barndominium we are going to say custom home. You will immediately see a change in attitude because now you’re speaking a language that they can understand, but nothing has changed at all with the project. Essentially, your barndominium is nothing more than a custom home, at Buildmax; we have begun to move away from the term altogether, just because it’s confusing to customers, banks, and builders alike. Barndominium is a great term to describe the styling you’re shooting for but does nothing as far as describing the overall building process. For instance, any plan you find on the Buildmax website was designed originally for a straightforward traditional stick-built process. However, the plans can easily be adapted to a number of building styles. One of the most popular ways to build a barndominium is with a steel kit, and with the price of lumber at an all-time high more and more of our customers are opting to build with our cold form steel framing option. It’s important to keep in mind when I talk about a steel kit that you understand that I’m only talking about the frame, which is essentially an unfinished shell. No windows, no doors, no insulation or drywall. You will get cut-outs for the window and doors to be hung. For the price, the steel will last much longer, have fewer overall issues, and be stronger in extreme weather. Either storms, wind, or snow, the cold form steel is up for the job.
You can finance your build in a number of ways. Maybe you don’t need to borrow the full amount since you’ve been saving and planning your build for such a long time. Maybe your situation is different and you do need to borrow the full amount? Can you even qualify? We get asked about financing a lot, being in the house plan industry, and to be completely honest we like to direct our clients to someone that we know and trust. I’ve included that information here. New Century Bank has been great at getting some of our customer’s money in order to build their dream barndominium. Buildmax likes to stay in our own arena and we tend to not answer too many financial questions because we just don’t have the answers you need, but we know someone that does. We are more than happy to connect any of our customers with our go-to guy for financing a barndominium home.
I’ve noticed that many small hometown banks, credit unions, and Independent lenders are more comfortable and in turn more likely to lend money on a barndominium or a custom home, whereas most if not all larger banks like Chase, PNC, Bank of America and others tend to not lend as much money for home builds that are outside of the norm or that the bank just isn’t completely inside their comfort zone. Everything at the bank is done on a case-by-case basis, so it’s not entirely fair of me to generalize and paint the larger well-known banks along with their loans as unobtainable to the common American. Many factors come into play when borrowing money from a financial institution, for instance, do you know your credit score? how much you can afford for a down payment, is your property paid for, or do you still owe money on it, what is your yearly income? what is your debt to income ratio? As you can see with so many factors it would be really easy to slip up and make a mistake or for you to simply not qualify based on just one of many factors all it takes is one discrepancy for many banks to deny your application.
It is also good practice to fill out the application with the assistance of a qualified loan officer. Many people like to fill out the paperwork on their own and submit it to the bank that way. I’ve found the best way to secure a loan is by 1 on 1 interactions face to face with a loan officer. If you can get the loan officer on your side and understand your build, you have a much greater chance of securing financing, I like to think of the loan officer as the Gatekeeper; nobody gets through unless he approves access. In preparation for your appointment with the loan officer, it’s important to be well organized, clean-cut, slow methodical speech and already have a copy of all your documents printed and organized for the loan officer this will show him you are serious and organized and have already taken steps to get this loan.