According to Larry and Blanche Sharpe, one of the best ways to get a custom house at moderate price is to buy a pre-cut log cabin package.

The Sharpe's three-bedroom home is nestled in the Catoctin Mountains of Frederick County, on a 20-acre lot where they had previously put in a swimming pond, fed by five natural springs. When they decided to build there seven years ago, they wanted something they could orient toward the lake, that would blend naturally with the surrounding mountains.

There were also practical considerations. The first was money. Larry Sharpe had just retired from the Foreign Service, and the Sharpes did not consider themselves rich.

The second was time. Larry had taken a teaching position in Washington County, 60 miles from where they were living in Silver Spring. The sooner they could build the house, the sooner he would be closer to work.

The white cedar log cabin package they chose seemed to offer much of what they were seeking. Manufactured by Bellaire Log Cabin Homes in Bellaire, Mich., it cost less than the traditional homes they'd priced. It could also be put up quickly, in three months instead of six.

After they saw a basic plan they liked at a West Virginia recreation development, they checked the soundness of their choice with the National Wood Council, the power company, and the American Institute of Architects. Then they decided to go ahead.

The exterior package, Larry said, "was actually just a bunch of logs dumped on the property -- and I mean dumped." The real advantage of the kit was that the interior floor plan was completely flexible, allowing them to do the designing themselves.

Blanche drew her plan to scale and then gave it to the builder, who ordered all the materials. The huge central living room (28 by 19 feet) with its cathedral ceiling was designed to overlook the lake. Two wings contain the bedrooms, kitchen, dining room and laundry. There is also an unfinished basement.

"We came almost every day and made many changes," Blanche said. "Sometimes we marked off with chalk where the rooms were going to be." The flexibility allowed them to add many custom touches at no extra cost, such as a solid, nine-foot wall in the living romm, for example, to accommodate a long shelving unit they'd bought while they were living in Copenhagen.

One reservation they had initially was about the white cedar panels that would form all the interior walls.

"At first I thought Iwould get bored," said Blanche, who was used to conventional drywall and paint. "But I didn't. The wood exudes warmth and takes on a different feeling in every season. It glows in certain light."

She particularly likes the golden cast the wood gives. "Redwood and red cedar have a natural orange cast," she said. "I think that would be much harder to live with."

Because they bought before the energy crisis, the Sharpes had their house built by what is called single-log construction. The split logs that form the exterior walls are sheared off on the inside to make a flat surface, which then becomes the interior wall. The only insulation in the walls is what is provided by the log itself -- an average of four inches of wood.

By today's standard, this is inadequate. According to Dennis Vottrell, a spokesman for Potomac Edison, the logs offer less than a third of the insulation currently being recommended for an all-electric home like the Sharpe's.

In response to this problem, Bellaire and other manufacturers now offer winterized versions of their homes with conventional insulation added to the logs.

"We usually put one inch of styrofoam against the inside wall," said Loren Drury, sales manager for Bellaire Log Cabin Homes. "Then we use furring strips and pine or spruce paneling boards. This still gives the rustic effect and conceals the panelling." In the roof, syrofoam and plywood go over the roofing boards, creating an insulated sandwich with felt and shingles on top.