[chassis]

On the surface it seems to give you the funding source you describe and apparently wish to have. It sounds like a revolving line of credit, secured by your primary dwelling, with a conversion option to a 15 year term loan.

You are paying the bank a coupon of 3%, using a prime rate of 3.25%. They are buying a bond from you, backed by your real estate. A 3% bond is in the ballpark today. Moody's investment grade bond average is around 2.3%. High yield bonds are north of 4%. So the bank views you and your real estate as riskier than an investment grade corporation, but less risky than a high yield issuer.

Alternatively, are you in a position to fund construction of the barndominium out of liquid assets (cash or liquid securities)?