Is property I own used as collateral against the pur. price of a pre-fab home to put on it to lower payments?

Question

The 6 acres I own in W NC is worth more than the cost of setting up the pre-fab home - I need the loan for the home, basement, garage, septic and well.....not the land itself -

Answer 1

Many companies do exactly what you are referring to. Since you don't have cash (assuming) then you go through the companies finance company, use your land as collateral. Now they have a lean on your land and the house if you default. Typically the interest rate will be higher as well.

This goes beyond your question but here is some more unsolicited advise. A prefab will NEVER be worth what a traditional stick and brick home is. It is actually a depreciating asset if it's ANYTHING like a mobile home. If it comes in on wheels, you are better off saving for a traditional home.

There are homebuilders that can get construction loans and role your land into the building (sales) price. Please look into a traditional home builder first.

Answer 2

The collateral is only security that if you can't repay the bank the loan as you agreed to do, they can have something of value they can get when foreclosing on you. You want to put up as little collateral as possible and pay off the principal as fast as possible, usually.