P.O. Box 5194
Bloomington, Il. 61704
Financing Your Lot
Once you have found the perfect lot the next step is figuring out how to pay for the lot and the cabin. We were very fortunate in finding a lake view lot that was under $3000. Our lot is not directly on the lake but we have a nice view of it from our back porch. The lot also came with water, sewage and electricity already on the property. The cost of the land was low enough to finance it with a credit card. Now you may think this is insane but if you have enough credit limit on your card it is a fast way to tie down the land purchase. Once the land was ours we then did the estimate for the cabin and found we needed about $6500 for the building material. This may not seem like enough money but the cabin we built was about the size of a one car garage and with the post foundation we used this amount covered the framing, roofing, siding, interior doors, cabinets and plumbing. I used the credit card to start the framing and get the cabin weather tight before we went to see our banker about financing the property.
The bank gave us several options for financing our retreat. The first option was a mortgage on the property by itself. The advantage to this loan is it keeps the property separate from our home mortgage and would make it easier to sell if we ever wanted to sell the property. The second option was a home owner line of credit. This option gave us more money than we needed but would allow us to borrow what we needed as we finished the cabin. This type of credit also has a flexible repayment schedule and is still separate from your home mortgage. The problem with the two previous options was both plans added to our monthly payments and the property also came with an association fee and of course county property taxes. The third option the banker proposed was to refinance our home mortgage. At first I was reluctant to do this until we examined the numbers and looked at the monthly costs.
My wife and I had bought a $100,000 home ten years ago that is now worth about $150,000. That fifteen year mortgage is now down to about $48,000 on the principle, which leaves us about $100,000 in home equity that is available for a loan. The banker suggested we refinance our home and add any amount we needed for the cabin and extend the loan period an extra five years. Our original loan payment was about $900 per month for fifteen years and we had five years left on the loan. Our new loan was for $60,000 for a period of ten years but had a payment of only $700 per month. What this did was pay off the cabin and the credit cards, lower our monthly payments by $200, and gave us enough extra money to by a small sailboat. Our mortgage has been extended by five years but that is about the same amount of time it takes to pay off a car. The benefits far out weigh the costs as we now own the cabin free and clear, and can enjoy the lake every weekend, and even have extra money at the end of the month.
If you would like help estimating what your cabin will cost see the Bill of Materials that is included in our Vacation Package. All of the materials needed to build the cabin are listed along with prices from the national lumberyard chains. Just enter our site and go to the automated catalog to order. All credit card orders are secured throught Card Service International.