The first step you need to take in the financing process is to determine how much you can afford and how much you are able to borrow. This will also determine the amount you can spend for the land and the house. Lenders that we have worked with in the past will allow you to finance part of the land purchase with the house. If you own the land free and clear that is a major advantage in the financing process. It is also important to select a lender that has financed modular homes because the disbursement process is different than building a site built home.
Pre-qualification by a lender provides an estimated building budget for you i.e.,how much money the bank is willing to lend you based upon your financial situation and the value of the proposed house. To be pre-qualified is not a mortgage approval. The borrower(s) must make a formal application and the bank must issue a mortgage commitment letter that designates approval. The amount of money that you have to put down, plus the amount of the mortgage should be the approximate cost of the land and the house.
The application is the formal request for a mortgage approval. When filled in with the borrower’s personal information and submitted with income and asset documentation, the lender underwrites and either approves or denies a borrower’s request for a mortgage.
The documentation usually required with the application is the contract with the builder/dealer of the modular home which lists the scope of the work to be completed and the price. The lender can order an appraisal from the quote and the house plans. Other documentation is usually required prior to closing the loan. Standard closing conditions usually include, but are not limited to a building permit, an acceptable appraisal, title insurance, source of the funds (money) needed to make down payment and closing costs, and any applicable insurance policies (builder’s risk insurance).