As a matter
of fact, a construction loan for a Modular Home will carry a greater interest rate
than a standard mortgage, because it is actually a line of credit and will
cover only as much of the cost of building your modular home as been determined
in advance. These costs will include the price of your building lot, the cost
of all building permits and other legal fees associated with your construction,
the cost of your modular home itself, and the costs of any labor and additional
materials required to finish your home.

You may
also need to find a lender of construction loans for modular homes who will
agree to include the amount of interest you pay during the construction and
cover any cost overruns. When the work on your home is completed, the total
amount you have run up on your line of credit will be converted to a standard
residential mortgage.

However,
you’ll need to find other ways to finance the early stages of your modular home
instruction, including soil and perk tests, building plans, and your site plan,
which must be approved by your municipal zoning board before you will be have
access to the funds from your construction loan for a modular home.

In
practice, none of the work being done on your modular home will be paid for
until your lender has had it inspected, and when a particular phase of the
construction has been completed and met inspection standards, payment will be
made directly to the suppliers and subcontractors. Then, if you need to ask for
more payments than the number to which your lender originally agreed, you may
be charged an additional fee for each extra payment.

Like traditional
mortgages, construction loans for modular homes may require you to come up with
a down payment. The chances of this will be higher if you are requesting a very
large loan, or don’t own the lot on which your home will be constructed.
Nonetheless, there are also lenders of construction loans for modular homes who
will give 100% financing even if the person building the home doesn’t own the
lot outright.

What is
more, the same as a traditional home purchase, you should establish a budget
and stick with it when you are building a modular home. You may be tempted to
keep asking for extras when your modular home is being designed, but done so
can throw your entire project budget out of whack and make it more difficult
for you to qualify for a construction loan for modular home construction.