Prefab manufactured home use in the US has grown to reach revenue of $10 billion in 2018. With so many people opting for modular homes, are you missing out?
What do you do if you need modular home financing? Is financing a modular home the same as financing a traditional home? Continue reading this article to learn about getting modular home loans.
Modular Home Financing Explained
When you’re looking into financing, there are key things you need to know about the buying process. When you have all of the information you need, it is easier for you to go through the process smoothly.
Financing Is Financing
You may have heard that getting financing on your modular home is going to be more difficult than getting financing on a home that is built on-site. This simply isn’t the case.
The main difference in the home you’re purchasing and the homes built on-site is where they are built. It is true that some homes have different benefits and many people go back and forth on the topic of modular vs manufactured, but you can get financing for prefab structure.
More people are seeing the benefits of buying a prefab home, and banks are used to financing them. Here is how you can get the best results when applying for financing.
Know How Much You Can Afford
When you start looking through potential homes to see which ones are going to be the best option for you, you need to know how much you can afford. If you start looking online or in person and fall in love with a home that is out of your price point, this can lead to dissatisfaction.
When you look at homes out of your price range, you waste your time. Instead of spending time looking at homes you can’t afford, know your price range and spend your time finding the perfect home in that price range.
Think About the Location
When you purchase a modular home, you can put it anywhere you want to put it. When you’re looking at property, you should think about how close it is to town, what the view is going to be like and all of these personal things.
Other points you need to think about is how much the land you’re looking at is worth. If you want to purchase the land but the bank doesn’t think it is worth the asking price, you may set yourself up for disappointment.
Figure out how much of a loan you can get and look at how much money the land you want is actually worth.
Pre-qualified Might Not Mean What You Think
When you see that you’re pre-qualified, make sure you understand what it means and don’t take it as the amount you can use on anything you want. Pre-qualification isn’t even a true approval.
Getting pre-qualified only does a soft pull on your credit. You can pre-qualify as much as you want with as many banks as you like without hurting your credit.
Pre-qualification can help you get an idea of how much money you can qualify for, but it doesn’t always mean that you’re good to go. If you want to buy a home, you need to go through the approval process after you’ve found the home you want to buy.
Understand Higher Interest Rates Mean Big Payments
Since you have access to the internet, there are so many different lenders and options available to you. You can go onto one website and see many offers come up asking you which one you would like to take. Seeing all these offers can be exciting, but it can also be overwhelming.
When you look at some of the terms available to you, some of them could be very high-interest loans. Unless you have derogatory items on your credit or very young credit, you shouldn’t expect to pay high interest rates.
As you look at the offers that come to you, look at the APR as well as the term. A high APR and shorter term will mean a higher payment than a low APR loan with a longer term.
You need to find the sweet spot of a payment you can afford and pay the least interest as possible. If you can’t afford a big payment all months, you can simply choose to pay extra on your loan as you can so you have less interest to pay as the principal decreases.
How’s Your Credit Score?
Before you try to apply for credit, you want to get your credit score as high as possible. You may be doing things that are easy to fix and can help you get a lower interest rate if you fix them.
Are you carrying high balances on your credit cards? If you’re carrying high balances on your credit cards, this shows as high utilization on your credit cards. High utilization on your credit cards makes it look like you’re living to the max.
Look at the date your credit cards report to the credit bureaus. Whatever date they report to the credit bureaus, pay the card off or down very low a few days before the date. Don’t use the card until a couple of days after they report, so your utilization shows low.
Using and repaying your cards actually helps to build your credit, but if you’re repaying them and reusing them at the wrong times, it won’t help you.
Another thing that hurts your credit is late payments. Set up automatic payments on everything that allows you to set up automatic payments and keep the on-time payments high.
Need More Information on Buying Property?
Now that you understand modular home financing, you may want to continue your education on the topic. Knowing as much as possible before you buy is smart.
Your home is a long-lasting investment, and you shouldn’t have to worry about the buying process. Continue your education by reading our articles on buying property today.
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