Are you considering building a modular home on your land or property? If people are discouraging you due to financing difficulties lets clear a few things up.
First things first… a modular home IS NOT a manufactured home. Modular homes follow all local building codes same as a traditional site built homes. Modular homes are also placed on a PERMANENT foundation, like site built homes. Many people link the two into the same category causing confusion when it comes to financing availability.
For a better understanding refer to this handy chart from Rocket Mortgage:
Modular home financing construction is traditional in the case of what type of loan you will secure. Most often this is a standard conventional construction loan even for modular builds.
Your lender will require the same information from you as when you build a stick built traditional home.
- A list of all your income, assets, current loans and other monthly payments and liabilities.
- Updated pay stubs.
- Bank statements for the past few months.
- 2 – 3 years worth of tax returns.
- They will run an updated credit report.
You can also explore FHA, VA and USDA construction loans, all available in the right circumstances on modular home builds.
As with all loans your personal borrowing profile, size and scale of the project and your lender will determine specifics of the construction loan you acquire. In some scenarios a personal loan may be of better value than a construction loan based on the size of your home plans and total monetary amount needed.
Are you new to the new construction process? Prefabreview.com helps break it down:
“Over the course of construction, periodic draws on the {construction} loan are made by the modular home company (That’s US!) (and general contractor, if necessary). During this time, payments on the construction loans are typically interest only.
Once the home is completed, the final funds are dispersed to the builder, and the home is approved on the final inspections, payments on the construction loan are made towards both the interest on and principal of the loan for the remainder of the term.”
After the constriction phase, securing a home mortgage is just the same as a traditional built home.
“Because modular homes adhere to strict building codes and are placed on a permanent foundation, most banks and lenders offer a variety of financing.” – Rocket Mortgage
“Mortgages are loans secured by real estate or land, and the permanent fixtures built on it. Modular homes are placed on a permanent foundation. Once a modular home is assembled, it’s treated exactly like a site-built home so it can be financed through a regular mortgage. When it comes to a manufactured home, well, not so much. The difference comes down to the legal definitions of real property and personal property,” states Rocket Mortgage.
As you can see financing for a modular home is no different than if you were to build a new traditional home on your land. If you have more questions or would like a recommendation for modular home lenders in the Lowcountry reach out! Here at Generation V Homes we are here to help you make your modular home experience as easy as possible.