The basics of modular home financing
Financing a modular home is similar to a site built home or building project in many ways. When financing a home, there are generally two main options, a Fix Rate Mortgage (FRM) and Adjustable Rate Mortgage (ARM).
The terms of the mortgage can vary depending on the financial institution. However, when financing a modular home, the most common loan is a 30-year fixed rate mortgage.
Do You Need a Construction Loan?
When you buy a modular home, as opposed to a site-built home, there is a possibility that you may have to secure another type of loan in addition to your mortgage.
Before construction can begin, you may also need to obtain a construction loan.
A construction loan is usually a four to twelve-month loan that includes a series of payments while work is being done on your property and before the building inspector issues a certificate of occupancy. At that time, the construction loan is paid off by the lender and they issue you a mortgage to begin payments on your home. Ask your modular home seller or general contractor if you are required to obtain a construction loan, first.
It is possible that your general contractor will secure the construction loan for you – especially if they are financing the construction or own the land. In this case, there isn’t much difference between financing a site-built home and financing a modular home.
The Next Steps in Financing Your Modular Home
- Before you start looking at homes, know your financing options and know where you would like your home to be placed.
- If you plan on fixing a manufactured home to the lot permanently, consider purchasing the land as well.
- Visit different banks to learn about their rates and options. It is especially important to ask about loan options if you are considering a manufactured home.
If you aren’t quite ready to visit the bank about loans, ask your modular and manufactured home sales representative for help. They can often provide you with information without running a complete credit check.
Modular Home Resale Value
You can be certain that the quality of your home will not negatively affect your home’s value. Since modular homes are so similar to site-built homes, these homes appreciate in value over time as long as the home is properly cared for.
Modular homes can also be improved with additional features over time, similar to a site-built home. Upgrading the kitchen or master bath with a new design or including a deck or garage among other additional upgrades can help your home appreciate over time.
