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Homeowners Insurance and Loans

 



HOW DO I....? This is a hot topic in the tiny world of would be monolithic dome owners and in the greater community of alternative housing. It doesn't take much searching to find people frustrated by these two topics. Some people resort to some pretty interesting strategies to be able to build.

This is the reason I am devoting one whole post to them. They really do make or break people's ability to build. If you read other info online, you will find lots of people asking but not many answers. Unfortunately, one solution may work for someone in a specific location/situation but not for someone else. All I can write about is our own personal experience in Connecticut. This may or may not be the same for others. It is important to note that we are currently (as of writing this in Feb of 2023) the only Monolithic dome in our state. If you live in an area where there are already other monolithic domes you are in a much better situation than we were. It is also important to note that banks and insurance companies are "for profit" businesses. They are not in it to help anyone or any cause (no matter how noble or worthwhile). They are solely in it to MAKE MONEY. People seem to forget that and whine about how much more sense it makes to build homes that are more energy efficient and disaster proof. They blame/want insurance companies and banks to ignore laws our government put in place (risking their business) so that people can afford to build. The change needs to come from government not businesses. We first hand understand the frustration but it is misplaced. I talk more about why the laws exist in my other posts about loans linked below but the quick notes are the lending laws were changed after the 2008 housing bubble burst. During the 5 weeks it took for South Industries to build our dome shell we chatted with them on a number of topics. Of course these two important ones came up and that was when we learned what had happened. Before 2008 the company was constructing around 100 homes a year. After 2008 that number went down to just a handful and now their main business is commercial. I am sure other "alternative" types of homes went through a similar experience. If you want to learn the itty bitty details of our personal experience with the loan part I have already written about it in several old posts. Below are three posts I made that describe our experience with banks. They go in newest to oldest order. The oldest one (3rd link) was back when we were still working on our building plans and trying to figure out if we could even afford to build what we wanted. Spoiler alert... we couldn't and had to change our plans.

Click here for our post about finally closing on a loan

Click here for our post about finding a lender willing to work with us

Click here for our post very early in the process about talking to a lot of banks

We struggled with both of these problems and somehow are still stumbling slowly forward in our build. We realized very early that the only way we were building this house is by getting our hands very dirty.

 Our original plan was to do finish work ourselves but that has turned into doing almost the whole build ourselves. We essentially only had enough money to hire South Industries and do the rest ourselves. Material cost increases due to the pandemic and now inflation have made us slow our pace even more. We have a livable house but it is far from done and it will be slow going as we now have to save for each project.

For us, insurance was the easier of the two problems. We had (past tense) been using Allstate for a number of years for our vehicles and our old house. When we decided to build this house I called our agent to ask about future insurance. He assured me that Allstate would be able to cover our needs and that they didn't care that it was a dome. Well.... turns out they do care...now. I am unclear if Allstate has changed their guidelines since my conversation with him 6 years ago but either way they were a no go. They do not insure any "specialty constructed homes". That said, our farm and builders risk insurance has been handled by American National for the entire build. It is interesting to note that Allstate was willing to give us builders risk insurance on the house during construction... we just went with American National because it was bundled together with a farm policy we already held and therefore a better deal. American National had no problem getting creative in the paperwork and covering the house. The difficult part is their inability to come up with a replacement cost (they just went by the amount we have spent building) and how to check off all their little boxes. They needed to choose (multiple choice style) from things like: Roof type - shingle - asphalt - metal. A monolithic dome does not conform to their boxes so the company has to be willing to just pick something kind of close. Ours on paper is listed as flat roof asphalt. Our siding is listed as concrete. Neither is really true and that is the reason many companies just shy away from it. We do want to put a concrete "chain shell" on the exterior so hopefully in the future our siding will match the current insurance check box.

I have read that some people with monolithic domes just insure the glass and contents of their homes. We most likely could also do this because we do not have a traditional mortgage right now. Our loan is only on the land with utilities and a barn. They don't factor in our house. To understand that situation you need to go to the links I posted above, if you haven't already. Our original plan was to convert our loan against the land to a mortgage for a better interest rate once we moved in. We missed the timing by only a few months. If we had gotten our CO in early spring instead of late June we could have done that. Instead, mortgage rates shot up and now our loan, that was a high interest rate when we borrowed (because it was not a construction loan) is now considered a really good rate in general. It doesn't make sense to roll it into a mortgage when it is a currently competitive rate and if we were to convert we would have to pay closing costs. We will just wait until interest rates go back down to make it worth the fees associated with rolling it into a mortgage. I hope our experience helps but unfortunately there is no simple answer that will fit everyone's situation. Location, number of other Monolithic domes near by and personal financial situation all come into play.


Comments

  1. That's so great! For my Europa dome I gave up looking for financing. My stock and options trades were doing well and I expected to be able to pay out of pocket. Then the political panic over covid happened and 20, 21 and 22 were bad years for my trades.

    Construction would have stalled but in January 2022 my dad died and I basically expended my share of his estate to get about 70% of the way, plus I prepaid the appliances and cabinets, before I scraped bottom. My sister, who is my primary heir, stepped in and has been paying for completion.

    For builders risk insurance, when every agency I called said no, Nathan graciously allowed me to pay for the policy through their broker. But recently the local Farmers agent, with whom I had insured my garage (it was built first) said he can issue coverage for the house, once finished.

    Maybe -- maybe -- I will be able to move in by the end of May, but for sure before the end of June.

    ReplyDelete

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