Modular Home Financing: Difference Construction Loan and Traditional Home Loan

In modular home financing, you will need to compare two terms and programs. You have to understand what is modular home construction loan and its difference towards the traditional home loan.

The major difference between a regular construction loan and a modular construction loans is the disbursement or schedule.  These are pre-arranged scheduled payments paid to your contractor and/or dealer as specific portions of work are completed.  In modular home construction, you will have two draws that will be significantly different than with stick built construction.  These will be your deposit for the modular home, and the payment upon delivery of the home.  The cash- on- deposit payment required by the modular home manufacturer at delivery once caused a snag with the lenders.

Lenders didn’t want to pay until the modular home was on the foundation and inspected, but the manufacturer wanted to be paid before the house was set on the foundation.  This has been worked out with most lenders and they have measures in place to make this work for both sides.  Still, it is a good idea to make sure your lender is familiar with modular home construction loans to avoid any issues around this payment.