Modular Home Loans

Written by Beth Hrusch
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Building a modular home will require financing that fits this need. Often, the borrower can use the same kinds of loans used by anyone constructing a stick-built home. Modular homes, though, are considered manufactured housing and therefore will be placed in their own lending category.

Modular Home Mortgages

In the past, modular homes tended to be built on less permanent foundations. The concept of the "mobile home" evolved from the need for inexpensive housing that could actually be moved around if the need arose. Today, modular homes are hardly ever moved once they have been placed on a lot, and some even have block foundations. From the lender's point of view, a permanent foundation means a better lending risk.

A fixed modular home, on a lot owned by the borrower, is usually not mortgaged as mere property but as an actual home that qualifies for a standard mortgage. Consequently, lenders may offer better rates on a construction loan. When building a modular home, there are two construction loans available, one of which will allow the borrower to combine the construction loan with the permanent loan.

The builder can often assist with the financing of a modular home, or he can steer you towards a mortgage company that handles manufactured housing loans. These companies will be familiar with the options, and give a realistic idea of the costs involved in financing a modular home. The terms and rates are often different from those of a traditional mortgage, so it is worthwhile to consider a larger down payment or other ways to ensure the best possible deal.


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