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How to Finance Your Dream Cabin

Updated: Mar 18

Beautiful scenery and the soothing sounds of nature make owning a cabin a dream come true. Often, the main barrier you face to achieving this dream is a lack of information on how to finance your project. If you have ever wondered how to finance the purchase of your dream cabin as well as the perfect land on which you place it, this article is for you. 

Does Ulrich do in-house financing?

Financing is important and can cover office buildings, ranches, and even mother-in-law suites on a property. However, at Ulrich we do not currently offer in-house financing for cabins.

Having been in this business for a long time, however, we do have a network of lenders. Please reach out to one of our friendly team members who are dedicated to working with you to find the best available financing option. 

Is now a good time to use my 401(k)?

Every great crisis comes with great opportunities. As a result of the current coronavirus pandemic, the 401(k) program has become very flexible. As of this writing, using your 401(k) to invest in your dream home is a great idea if done strategically. 

You can now take a loan from your 401(k) without facing major penalties or interest. The money you use will be taxed as normal income for a three-year period. This is a huge opportunity to use this money to finance your dream cabin. It is a great time for people who have been contributing to their 401(k) for years.

What does the typical monthly payment look like?

The calculator at this website can help you calculate your loan payments.  A good rule of thumb is to figure 1% of the amount financed will be the monthly payment. For example, if the amount financed is $100,000, your monthly payment will be approximately $1,000.

How much money is needed for a down payment?

The amount you will be required to give the financial institution as a down payment varies. A normal mortgage product for a normal home requires about 5-10% down.  These products typically cover land purchases of 10 acres or fewer.

When you are seeking to buy more than 10 acres of land, you will move into the federal land system. There are different loans that you will need to tap into at this level. The bulk of our customers at Ulrich pay about 20% down.

If you’re a veteran, you’re in a good position to secure your dream cabin. VA loans are available, requiring a 0% down payment. For a veteran construction loan, you need to get in touch with your local agency and ask them to give you a recommendation for an interim loan or construction loan.

How many years do I get to cover these loans?

You will have from 15 to 20 years to pay off land that falls into the federal land system. If you are using a normal financing option, such as a traditional mortgage, you can expect to have anywhere from 25 to 30 years to pay it back.

You start by approaching the financier of your choice, requesting a land loan. When your loan closes, you buy your land. Once you’ve done that, the financial institution will then issue a construction loan. These construction loans are usually 6- to 12-month-term loans with interest only. After you finish preparing your property and dream cabin, the loans will be merged, and you will clear both over a period of time. 

What interest rates should I expect?

Several factors contribute to your interest rate. One factor is your debt-to-income ratio. Your credit score will also have an impact on the interest fee that you can get. 

Currently, we are in a time where the cost of loans are incredibly low. This is a perfect time to get in touch with your bank or an institution that you have a great relationship with and negotiate for your dream project.

How can I save money on closing costs?

There’s no secret about it — everybody loves to save money. To save money on closing costs, you can try to do a one-time close. If you’re doing a land purchase and a construction loan combination or a construction loan to a permanent loan, you can actually do a one-time close on all of the financing steps. 

At Ulrich, our hope for you is that you get to acquire your lifestyle structure with the best experience possible. Once you nail down your financing, you’re one step closer to your dream cabin. 

When you’re ready to get the ball rolling, reach out to Brian Pokrifcsak and our design team here at Ulrich and we’ll be happy to guide you through the process of finding the best financing option for you.

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