Tidewater Custom Modular Homes Blog

Although the concept of modular construction seems relatively new because of the increasing interest, it has been around awhile.  The concept of modular construction is confusing for new home buyers mainly because it is confusing trying to discern the information you do come across about modular homes, the modular construction process and modular home manufacturers.

We would like to help clarify these myths and help you make a good educated decision for your personal situation.
Modular homes are built in factories to specifications created by the manufacturer and the state and local building codes. The design can be standard or it can be enhanced by the customer/new home owner.

A General Contractor, such as Tidewater Custom Modular Homes, works with the manufacturer. The General contractor coordinates the construction of the home in the factory and the delivery and assembly of the home on the site.

The general contractor provides and coordinates the site work (foundation), plumbing, electrical, and licensing and permits. This is why they are called the general contractor. Once you select a GC, you don’t need to do anything else regarding the construction of the modular home.

Many people think that modular homes are cheap or inexpensive. As compared to the cost per square foot of a stick built home, they are less expensive. However, modular homes are an expensive investment especially depending on how large a home you build. They do, however, generally cost 10-35% less to build than traditional homes. When you are comparing new home construction prices, make sure you are comparing the same type of house i.e square footage, amount of bathrooms, etc.

Modular homes appreciate and gain value the same way traditional homes do. Once a modular home is built, it is near impossible to tell the difference between it and a stick built home.

Modular homes can all be customized. Each modular home manufacturer or contractor has different designs to choose from. Those designs can be further customized. Additionally, you can easily customize the windows, doors, siding, colors etc. Modular homes make it very easy to have a custom home at an affordable price.

The question often arises: Do modular homes appraise for the same value as a traditionally built home? Simply put, yes.

In order to buy a home, it must be appraised so you can begin the process of getting a mortgage or loan. An appraisal is the estimated amount a home buyer can expect to pay for their new home. When buying any piece of property, including modular homes, you need a licensed professional appraiser. The question then becomes, if the home is not yet built, how is it actually appraised?

The appraiser will inspect the modular home plans to have an idea of how much your new home should cost. Generally, they use information on labor rates, building costs, and depreciation and appreciation locally where the property is being built. The appraiser will use sales comparisons, prices and values of compatible homes sold in the area, to determine the current value of the modular home.

Once a thorough analysis of the property has been completed, a report is created which is used to initiate the mortgage or loan process. Included in the report would be the property specifications, the replacement cost analysis and the above mentioned comparative sales analysis.

The replacement cost analysis is the total amount spent on the construction and materials of the modular home, and the lot value.

All this will determine the current total value of the property. The modular home appraisal will then be finalized so that the loan transaction can take place. The calculated total value of the modular home will help you determine future expenses such as utilities and real estate taxes. 

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.

Modular homes offer a vast range of pre-designed homes, as well as custom designed homes with many benefits, to fit any family’s needs. Each home can be further customized to specifically address the individual home-buyer's desires. Spring is here and this usually brings with it an increase in home sales. Many people around Virginia are starting to think about buying a new home. And, as the low mortgage rates slowly rise, buying a new home sooner rather than later is the most optimal choice.
 
For those who are considering a newly built home, you should consider building yourself a modular home. As oil prices increase, all industries are victim to increased costs. However, modular homes companies are less affected than the stick built construction contractor.  The modules for Tidewater Custom Modular Homes are built in controlled environments to exact specifications. Therefore construction costs are already lower than the traditional builders’. The modular homes takes less time to construct; therefore, you are paying less for the worker’s time on site thus decreasing labor costs as well. The modular home factories have their materials on site in bulk, therefore are less victim to the immediate increase in transportation costs of goods and materials that most shipping companies are adding onto their invoices. Therefore, your materials cost is lower as well.

In spite of the economic situation people still need to buy a home. Rather than buy a brand-new stick-built home, a preferred solution for consumers (and the institutions that lend them money) might be a custom-built modular home.