The Magic of Modular Home Financing in Michigan
W
hen financing modular home construction, you will need to learn what is its magic. Many have been looking for the benefits of modular financing but only a few understands the process. Others also have difficulty distinguishing modular home financing from stick- built financing. So to assist you in deciphering what is modular financing, here are the summary of the financing process and its features;
Modular Home Financing Process
During the modular construction phase, you will typically be paying interest only on the money that you have used thus far in the process. As work is progresses, more money is paid out and your payments will increase accordingly. When modular home construction is completed and you have obtained your certificate of occupancy, the loan would then be converted into a permanent mortgage with principal and interest payment. In addition to these modular home financing options, some lenders offer the choice to also convert the land purchase loan into the mortgage with the construction loan. That way one bank finances it all. Most lenders allow a time period of up to one year to complete the modular home construction.
Difference Modular Home Construction Loan and Traditional Home Loan
The major difference between a regular construction loan and a modular home construction loans is the disbursement or schedule. These are pre-arranged scheduled payments paid to your contractor and/or dealer as specific portions of work are completed. In modular home construction, you will have two draws that will be significantly different than with stick built construction. These will be your deposit for the modular home, and the payment upon delivery of the modules. The cash- on- deposit payment required by the modular home manufacturer at delivery once caused a snag with the lenders. Lenders did not want to pay until the modular home was on the foundation and inspected, but the manufacturer wanted to be paid before the house was set on the foundation. This has been worked out with most lenders and they have measures in place to make this work for both sides. Still, it is a good idea to make sure your lender is familiar with construction loans to avoid any issues around this payment.
In case you still have question about modular homes, you may contact Legendary Homes Inc in Jackson, Michigan. A representative will be happy to assist you. Meanwhile you can check our modular home price sheets by signing up to our blog
