Tidewater Custom Modular Homes Blog

To build a modular home you need to pay the modular home company for building the modules and the general contractor for his services. If you do not own property, you also need to purchase that.

There are two typical sources of these funds. The first is private funds, such as personal savings, an equity loan on another property, or the sale of personal assets. The second is obtaining a mortgage through a lending institution, like a bank or mortgage company.

There is one major difference between paying for an existing, already built home and paying for building a new home. When you buy an existing home you pay the seller in full before you take possession of the home, usually through the mortgage. When you build a home, you make periodic payments as the work is completed. This protects you and the lender should something prevent the completion of the home on the GC end. Receiving compensation as the job progresses also protects the modular home company or dealer and the general contractor should something prevent you from paying for the finished home.

When you use a lender to build a home, you obtain a "construction loan" which is a short-term loan usually four- to twelve-months' duration. The loan provides for a series of payments as work is completed. Once the local building inspector issues a certificate of occupancy and the lender agrees that the home is essentially complete, the lender pays off the construction loan and issues you a mortgage.

What is the most different regarding construction loans for modular home construction is the time line. With traditionally built, stick built homes, the construction process is very long, a year or longer in some cases. The modular construction process is much shorter, a couple of months only.

What is the buying process for a modular home?

1. You choose your home and options
2. A contract is signed contingent on financing and a small deposit
3. Plan revisions are made and new engineered floor plans are drawn
4. You close on your Construction-Permanent loan
5. Your basement or crawl space foundation is built
6. We release your home for production
7. We set your new home
8. Finish work of your new home is completed

How complete is the home when it is set?
Depending on the floor plan and style, between 75-85% complete.

How long does it take to finish the home after it is set?
About 4-6 weeks.

Will you build my garage and/or porches?
Yes. However, this may be at an additional cost.

What is the difference between a Modular home and a Mobile Home?
Mobile Homes - built to a lax code with generally substandard building products (when compared to modular or site-built homes). Built on a steel frame to hold it together, most have wheels.

Modular Homes - built generally to the toughest codes required in the state, built out of the same type building materials and name brands you would find in site-built homes. There are no steel frames underneath, only approved floor system. There are no wheels of their own, they are transported and then lifted off the transporter and set with a crane.

How much do modular homes cost?
As with stick built construction the cost of a modular home will vary depending on what you put in the home and the style of home you choose. Modular homes prices compare favorably with an equivalent site-built home.

Can modular floor plans be customized?
Yes. There are standard floor plans of course; however, floor plans of each style home can be customized, as well as the amenities inside the home.

A new construction home loan is not the same as a typical home loan. New construction loans have different requirements and a different set of rules. However, the new construction loans are used for both new construction stick built and new modular construction homes. After learning about these types of loans you will find it is easy to finance and build your dream modular home.

A new construction home loan requires the lender to provide the money to build your new home. Firstly, your mortgage provider requires a detailed accounting on the estimated costs to build the modular home; including how much you are going to spend and what it will look like when it is complete. After these initial questions are answered you begin the credit check and annual earnings process.

There are a few different construction loans out there but the most popular one is a “construction to permanent” loan. Instead first applying for a construction loan and following that up with a typical home loan, a construction to permanent loan is a two-in-one loan which, in most cases, only requires you to pay closing costs once.  This loan is a combination of construction loan and permanent financing, and can help you save money and time.

Keep in mind that with new construction loans it is very difficult to lock-in a permanent or fixed mortgage rate. This is because with traditional construction, you usually won't be closing the loan for six months to one year depending on the build time. With modular construction, because the build time is so much shorter, you can more often get a fixed rate, or the fixed rate you close with after construction will be very close to the variable rate you had when you took out the loan. 

Of course you will be required to pay monthly interest on the construction loan amount during the modular construction process, but the amount you owe each month will depend on the amount you have used to date. If you are approved for a construction loan of $100,000 but you have only drawn $50,000 then your interest payment will be based on $50,000.

Sometimes lenders like to interview or see the license of the contractors who will be building your new home, so often it is beneficial to speak with the bank where the contractor has a relationship.