Chrysalis Farm Innovations: Financing and Insuring a Straw Bale Home - Homes Across America Search Return

Chrysalis Farm




Goals of Innovation: The owners needed to find a bank willing to work with them for the construction loan and end loan.

Find an insurance company willing to insure a straw bale home.

Description: This is the first straw bale home built in Northeast Kansas, which led to unforeseen problems in regards to getting a mortgage, insurance, and an appraisal. It was difficult to find banks to agree to cover the construction loan and the end loan. Insurance companies in the area are a little uncomfortable with insuring this type of home, mainly because there are no other comparables in the area. In addition, there are few house appraisers who are comfortable with competently appraising a straw bale home.

Obstacles: Negotiating for a Straw Bale Home with Bankers
A home mortgage was approved by 12 different lenders, then each disapproved as soon as the underwriter found it was straw bale home. The home was initially described as a post and beam home - which it is - but the problem came with the straw walls, even though they are not load bearing.

The problem was finally solved when the Eichlers' building consultant agreed to talk to his personal banker. The consultant, who had built several post and beam straw homes for which he had received financing, agreed to tell the bank that he would oversee the work to insure that the home was built to the same specifications he had used on previous models.

The owners were also able to find insurance through a small home insurer, who was aware that this was a straw bale home that also had a wood burning stove. They had coverage for about nine months, at which time an inspector came out and cancelled the policy. Even though the owners had supplied the insurance company with a full disclosure, as well as a picture of the stove that the inspector carried on site with him, the company cancelled the insurance saying it did not know there was a wood stove inside.

The owners' consultant contacted a major insurance carrier on their behalf. That company now insures the home for a smaller premium than the initial carrier.

Cost Information: The rates the Eichlers pay for their mortage and insurance is less than what some conventional homeowners pay.

Additional Benefits/Drawbacks: There are now three more straw bale homes in the area. The Eichlers met two of the owners, and have been able to help them with their home building project and other challenges that go with having an alternative home.

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