Tips on Financing Modular Homes
The process of modular homes is somewhat reminiscent to the popular automobile assembly lines that Henry Ford established almost a century ago. These houses are divided into several sections or modules and later on assembled together to form a residential structure. The modules are created in different locations and will be delivered to the building site upon purchase of the homeowner. Much like any other property you intend to invest in, modular homes cost money and you need to be financially prepared for it.
Financing modular homes is typically the same as financing any other kind of structure. Traditional existing homes only require home buyers to get a mortgage while new ones require construction loans. Loans are very effective in providing funds for you when building a modular home. Since you are virtually creating the single structure piece by piece, loans will be able to cover expenses on materials as well as labor in assembling the house. Every withdrawal you make from the loan account will be considered as a draw.
Like any other structure, a construction loan for a modular home requires evidence of land or property ownership, purchasing agreement between the builder and seller and house plans and specifications. One main difference in financing modular homes and financing traditional houses is the term length and amount of draws. Manufacturers of modular homes need payment before delivery of modules will be made. Traditional house construction loans last anywhere from 6 to 12 months while modular homes last only around 3 to 4 months. The advantage would be less interest.
You may want to consider giving a down payment of key modules that will serve as the main foundation of the house. It is recommended that you have some money ready to purchase the main materials while getting loans to finance smaller pieces, add-ons, upgrades and cost overruns. This will help keep your overhead in check and interest rates manageable.