|Re: Financing for Alternative Building Technologies||<– Date –> <– Thread –>|
|From: Eric D. Hart (erichartmtn.org)|
|Date: Mon, 3 Jun 1996 11:12:32 -0500|
Mac Thomson wrote on this list a while back: >We just had a mortgage banker speak to our group about getting a home=20 >mortgage in a cohousing community. He felt that a loan for a home in=20 >cohousing should present no special problems. But then we got into the=20 >issue of financing homes built using alternative technologies. (:-<) > >When he asked who in the group was considering alternative building=20 >technologies, everyone raised their hands. He then went on to explain=20 >that receiving financing for a house incorporating alternative building=20 >technologies would be very difficult. The problem is that loans are=20 >made based on the appraised value of a home and appraisals are based on=20 >recent sales in the area of comparable homes. And since there are=20 >almost no sales of comparable homes, they can=B9t give a loan for=20 >non-conventional housing. > >What have any of you done to creatively finance "experimental" building=20 >methods? THis could be a real sticking point for a number of households=20 >in our group. Since I am involved with strawbale construction this question has come up more than once. Many strawbale homes have gotten financing and it seems to depend on the bank you are talking to. I'll send you a list of strawbale homes that have gotten financing and the banks that made the loans. One good resource in general is the book Eric Black wrote on financing homes that use alternative construction (including strawbale). His company, Black and Associates of Flagstaff, Arizona is available as a consultant for obtaining mortgage loans or as a broker for mortgage loans. Contact Black and Associates, 1623- A, N. San Francisco St., Flagstaff, AZ, 86001. 520-773-1574 or 520-774-1008. He wrote an article in The Last Straw magazine on Obtaining a Straw Bale Home Mortgage. For those of you in Washington State there is the Greenloan program. Jeff Albrecht is the loan officer for that program. He operates through First National Home Mortgage in Bellingham, WA. You can phone him at 800/738-6720. He can arrange construction and conventional financing on straw bale and other alternative housing styles. A group in the Seattle area, GreenFire Institute, has gotten financing for strawbale houses through this program I believe. Sounds like something banks in other parts of the country should replicate. =20 Another piece of advice I could give is that try to minimize the amount of money that you need to borrow from the bank. The bank is the biggest obsticle (then come the code issues) so the more you can avoid the bank, the better. Some people have gotten loans because they have made a large downpayment (i.e. 30%). I think the blanket assertion that these types of homes won't be financed because they have no comparable sales is untrue to some extent. Eric Black maintains that you should negociate with the bank and get the loan based on your character and the *relationship* that you develop with the bank, rather than with what has been sold in the area previously. I think that you would have better luck with the small local bank with only a few branches (if any) than with monster banks like Bank of America or First Interstate where somebody 'higher up' might nix the loan, even if the local loan officier approved it. Last piece of advice, if you can't come up with large downpayments or get financing, consider pooling your group's money. If everyone isn't building at the same time then people might be able to pool their money and get enough money to provide construction loans to other members. Once the building is constructed, it may be easier to get end financing once the building is up and it looks 'normal'. This is the sort of scheme we hope to carry out with the Building Cooperative we are organizing. Check out the Community Eco-design Network's home page (the URL is in my signature) for more details on the Building= Co-op. =20 This is an important thing to figure out as it is holding up utilization of proven alternative technologies which make housing more affordable and ecologically sensitive. Eric D. Hart *We do strawbale construction workshops! Community Eco-design Network *Call (612) 305-2899 for more information =20 Minneapolis, MN USA * Check out our WWW page:=09 erichart [at] mtn.org http://www.umn.edu/nlhome/m037/kurtdand/cen =09 =09
Financing for Alternative Building Technologies Mac Thomson, May 28 1996
- Re: Financing for Alternative Building Technologies Eric D. Hart, June 3 1996
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