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What is the mortgage picture for prefabricated homes?


What is the mortgage picture for prefabricated homes?

Today, the housing estate is seeing a whole new dimension. We have homes built in a factory and delivered in parts to a construction site. These parts are then assembled at the site and the home is ready before the owner can even imagine.

Such is the new era of home designing and housing!

These factory-built homes are known by many names like prefabricated homes, modular homes, manufactured homes, mobile homes, etc. But each has its own characteristics.

Prefabricated homes and modular homes are the same. The parts and units are processed in a factory, and are brought to the construction site, for assembling!

But, manufactured homes are referred to as homes on wheels. No joke!

These are constructed as units on a steel foundation, in a factory, and the whole setup is brought to the construction site, either on a flatbed truck, or dragged on wheels. Once delivered to the site, the wheels are detached, and the house is placed on a labeled platform!

Our discussion is however not going to be limited to different types of homes and how they are constructed. It will mostly include the financing options and the mortgage scenario associated with manufactured homes and modular homes!

Is it tough to get a mortgage loan for prefabricated homes?

Yes, it is tough!

Modular homes are assembled on site, and therefore, a lender can’t issue you a conventional mortgage loan until and unless the house is ready for occupancy.

Plus, the maximum loan limit is also low as compared to loan amounts for a ‘ready to occupy’ house.

Hence, it’s better to take out a construction loan than wasting time for getting approval for a traditional mortgage loan.

Construction loan terms and quotes vary from lender to lender, and there are some who don’t even finance modular or manufactured homes.

You got to understand a few things first. Modular homes are sometimes not equalized to a traditional home and a lender might frown when you approach them. You need to explain what you mean by a modular home and justify that your home meets all the housing criteria of the United States. In other words, your home must agree to HUD conditions!

Practically by a house, we mean a well-constructed building grounded to a real property (land), that overall can be considered and certified as a real estate.

Manufactured homes were previously known as mobile homes and they could have been easily moved from one place to another, as they came with wheels.

But with the change of time, the definition of mobile homes changed, and they now come with a steel chassis, which can be embedded on a flat foundation.

But you can still remove this building structure anytime you want, and therefore it is to be considered as a part of your personal property.

Probably due to this flexibility, it becomes really difficult to get a loan for manufactured houses.

On the other hand, even though modular homes or prefabricated homes are assembled in units, they are still considered to be real property. Unlike a manufactured home, modular or prefabricated homes can’t be removed from its foundation anytime you want. They function very much like a traditional house, only that its parts are processed in a factory!

What type of loans are your options for modular and manufactured homes?

As in its real sense, you need to approach the lender with this basic fact in mind that your house is not a conventional one!

So, if you are lucky enough and can gel well with the lenders, probably only then you can take out a conventional mortgage.

Else plan for a construction loan and/or a chattel loan (personal property loan). These loans, even though have stricter terms, you can still get one for your modular or prefabricated homes.

As said earlier, all lenders have different lending conditions like Fannie Mae has no such special appraisal requirement for modular homes. Refer to the eligibility criteria of Fannie Mae’s modular house mortgage lending.

But, Union Square Credit Union is really straightforward and strict about their lending conditions of the modular home and manufactured home loans.

Check out the Union Square’s lending criteria and then compare it to other institutions to get a clearer mortgage picture for prefabricated homes.

Moreover, the home dealer or the manufacturer, with whom you will be working on your new house, will definitely help you out to get suitable loan for your property! Actually, they can help you get the loans without much of a hassle and probably even at lower closing costs.

Therefore, in the end, you have two most integral types of loan options open for a prefabricated or modular home.

One is the personal property loan or the chattel loan, and the other is the construction loan. And as said earlier, you might even qualify for a conventional mortgage loan if you work with your house manufacturer or the dealer.

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