Why am i having trouble financing a Modular house???

Question

OK my fiance and I bought a little ranch house about 4 years ago. W now want to buy some land near my parents in Pa and put a brand new modular home on it!!! The problem is all these companies keep telling us they cant finance mobile homes, but i've researched it and and ther is a difference between Mobile and modular!!! in fact my sister and her husband bought a beautifull cape modular home about 10 years ago and it is considered a house, Her home even went WAY up in value. im getting very dicouraged!!!! What is the problem???? These modular homes are beautiful it seems stupid to stick build when these new modulars are available. what should i do? Am I getting screwed over by these finance companies or what?

Answer 1

New construction modular homes are actually quite nice, and in many cases built much better than traditional stick built homes. With that said, I am surprised that you are finding it difficult to obtain financing. In 90% of cases, unless something has changed, most mortgage lenders treat modular homes just as they would any stick built home. I would imagine that there is still some confusion about the differences in modular and mobile homes, but that should be rare, especially with the competition to get your business.
Contact a few of the large national lenders like Countrywide or Bank of America. Just give them a quick call and see what they have to say about lending programs. If I am not mistaken they do not differentiate.
I have seen modular homes with values as high as $1000000, so its the real deal, very energy efficient and built to the same code as on site construction. Make sure your lenders understand this. In addition you should simply contact the manufacturer of the home you would like to purchase and ask for a list of approved lenders or lenders that have financed their homes for purchasers in the past. That would be a good place to start.

Best of luck

Answer 2

Good answers- Yes, you need to make sure you are truly getting a modular home. Is this house being placed on a permanent foundation? Some mfd housing dealers are selling their inventory as modular simply because they use brick or block skirting around the bottom of the home. If the home is permanently built on a trailer then most lenders will classify that as a mfd home, even if the wheels are removed. A true modular is prebuilt under proper conditions and brought to your property to be finished on the foundation. The foundation is the key for your financing. When you are shopping for financing you need to stress that your home will be "permanently" placed on your property and that the land will be included in the financing. This will classify your loan as a real "mortgage" tied to real estate. Find out what the lenders foundation requirements are upfront so there are no compliance issues. Mfd and modular homes can be considered for conforming loans if set up properly and tied to real estate.

Answer 3

GK is correct. As far as the industry is concerned, a modular home is treated the same as a stick built home. A manufactured home is something different entirely.

Modular homes are built by a trained staff working in a factory with proper lighting, a roof, and the right equipment. These people receive regular pay, benefits, and health insurance. Stick built homes are built exposed to the elements, by whomever could be found hanging outside Home Depot that morning, with whatever equipment was on hand that day. Yet most Americans prefer stick built. Go figure. Anyway...

There is one trend, though, to which you might be falling victim. Some manufactured home manufacturers are building what are, essentially, mobile homes but changing the roof pitch and not recording the motor vehicle titles. The manufacturer claims these are not manufactured, but rather, modular homes. This is done to get around the financing issues and some code issues. However, these are manufactured homes. The lending industry rightfully treats them as such. Might that be the case with the home you are considering?

You mention your sister's home is a cape, which leads me to believe it is two stories. That is definitely modular. But if yours is only one story, it might be one of these pseudo-modular.

Another possible issue: You mention you're going to a finance company. That is another sign that you are dealing with what is really a manufactured home. Go to a mortgage lender or mortgage broker. They deal with this situation day after day.

Best of luck.

Answer 4

I am a banker and believe it or not there are many people in the finance world who are still un familiar with new modular homes. I am considering building a modular home myself and have had trouble talking with my mortgage buddies about financing. I have found that your modular builder will have people that they can recommend for financing. Good luck!!