In this article, we provide a step-by-step guide to finding, choosing, and applying for a modular home mortgage to help finance your new home.
When financing modular homes, banks will usually allocate you a loan - construction loans and permanent loans. You will face both of these stages before your home is finally completed. When it’s still under development you will go through the construction loans. And, then once everything has been finished you will go through the permanent loans. At the time, you'll be able to take out an actual loan against what's leftover from building costs.
Start a Pre-Qualification Assessment:
When deciding to buy a house, your finances must be in order. You will want to start with a pre-qualification assessment. It will allow you to assess how much money the bank is willing and able, based on the financial information they have scraped from your records and your general credit history.
However, this number can change depending upon many factors such as current market rates or even just differences between individuals seeking loans at different points in time (like refinancing). The point here isn't necessarily getting approval but rather understanding what type of loan would work best for both you and the lender.
It is important to find the right bank and apply for a mortgage as soon as possible. Think about how much money you will save by waiting - even just one day can make such a huge difference in your life.
Apply for the Loan:
You can't start building without a loan, so make sure you apply before starting. You'll need:
- Contract with the home manufacturer you plan to purchase
- Your W-2s from the past 2 or 3 years
- IRS Form 4506-T
- Federal Tax Returns (1040s)
- A detailed account of your assets and debts
- Proof of employment
- Work History for the past 5 years
- Proof of income from a CPA
- Information on any outstanding loans
- Certified bank check to cover fees (credit check and application fees)
- Notified copy of the deed for the land you’re building on. If you’re buying the land, ask the seller to include a letter of intent of sale with as many details as possible
- Blueprints of the home for appraisal. If your appraised value doesn’t equal or exceed the risk the bank is taking with the loan, you will not be approved
You can get your loan approved even before you apply by showing the bank’s commitment letter. You need this approval to finalize any contract with a manufacturer or land seller, but neither want them stuck taking on risk if it isn't fully covered- so they'll provide unofficial guarantees for satisfactory applications.
Build your Home:
When you are building your home, the bank will require monthly payments from you. These interest-only loans can't be paid off until after the completion of construction onsite which means it's important to complete this task as soon as possible so that we don’t continue making unnecessary additions to our debt load with nothing but more fees coming out.