Question:

What are the steps to secure new modular home construction financing?

Answer:

Providing modular home construction financing is perhaps the greatest concern to homebuyers, who are willing to get a new custom-built home. Besides choosing a mobile lender, here are the steps that are likely to be included in your budget plan.

Six Basic Steps for New Construction Modular Home Mortgage Financing

  1. Modular home mortgage prequalification - this serves to find out how much of a modular home you can afford.
  2. Modular home mortgage estimate - providing thorough preliminary information will get you more accurate numbers. This doesn't actually guarantee that you will get the desired loan amount, as the bank will verify the submitted information.
  3. Submitting formal mobile home loan application - as long as you have made a choice for the building location, modular home manufacturer, and some building plan you can submit officially a modular home mortgage application. It may take several business days for the lender/bank to process the application.
  4. Official bank modular home loan approval.
  5. The official approval will state the loan amount, and the conditions of the loan that have to be honored before the loan is disbursed. The following documents, and probably others, will have to be provided at some point:
    • Detailed modular home design and building plan;
    • Agreement with general contractor to state specific labor costs;
    • Deed for the building lot, if you already have the land, or any rental or mortgage agreement for a land lot the house will be placed;
    • Building permit from the local authorities.
  6. Modular home construction mortgage post-approval.
  7. Loan disbursement will follow the schedule of your new construction modular home delivery (foundation, modules delivery, exterior and interior completion, etc.). Certain inspection and verification of completed stages of your home will be required every now and then, prior to getting a check from the lender to pay the vendor.
  8. Construction loan closing. It is very likely that you will get a separate construction loan for your home that will later be replaced with a permanent mortgage. You have a choice here - either get a construction loan and a separate long-term modular home loan; or negotiate a construction-to-permanent mortgage for your new factory-built home.
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