The immense popularity and numerous comforts prefab modular homes offer have attracted many customers over the last few years. However, many prefab homeowners do not know that most modular home mortgages combine their home, land, and even site improvements.
You might be shocked to learn you can build a prefabricated home without spending any money out of pocket. However, financing can be a bit confusing. It’s often a tough subject for people who are interested in building new prefab modular homes. Be sure to consult with your homebuilder and other modular homeowners to get an idea of how financing them works.
Financing a Modular Home
Several prefab homebuyers have the misconception that acquiring a prefab home mortgage is very difficult. Some also claim that borrowers will have to submit huge down payments if they do acquire a loan. In reality, acquiring a mortgage for your prefab home is actually a simple task, and you should not need to make a large down payment.
If you are planning to buy an existing prefabricated home, then you should note that the loan process is quite different from building a new prefab home. In this case, you will only need a permanent mortgage. This is also known as an end loan, since construction of the house is already complete.
On the other hand, when you are building a new prefab home, then you will certainly require a specialized financing, which will cover the construction and transportation cost of the structure. This type of loan is popularly known as construction perm, which is short for construction to permanent loan.
If you are planning to acquire a construction perm, then you should note the fact that this loan will pay both the suppliers and builder during the construction process of the home. However, it eventually becomes a permanent loan when the construction of your house is completed.
So, make sure to consult with your lending institution or bank and get a clear idea of what construction perm is. This will help you to avoid potential downfalls and other issues in the future.