Is it a Modular to the Lender?

Real Estate Article: Larrygoins.comThat is the question! What you think and what the State defines, as a modular home, may not be the same definition a lender uses for a modular home. The lenders’ philosophy is this, “If it walks like a duck, and talks like a duck, it is a duck.’ What they really mean is if it looks anything like a mobile home, i.e. the roof pitch, the shape of the home, is there metal underneath, it is a mobile home.

Modular home dealers in both North and South Carolina will tell you the house is a “true modular home”. And by the states’ definition, it may be considered a modular. However, the state is not loaning you the money. You need to ask if it is being put in place by a crane and is there any metal underneath the house. If there is metal, it is NOT a modular home to a lender! If the roof pitch looks similar to that of a mobile home, it is NOT a modular home to a lender! If the house is being placed on a road or in an area where there are other mobile homes, it is NOT a modular home! Dealers will be able to sell you the home on frame or off frame. Off frame is much more expensive ($4000 -$8000 more). On frame is a mobile home, off frame is modular, but what does the roof pitch look like? (Does it walk like a duck?)

Forgive me for going around and around with this but it can be so hard for some people to understand something when the state deems otherwise. What worries me the most is that lenders have really changed their tune on lending money for mobile homes? A few really bad dealers have ruined things for the honest folks by changing out homes after the appraisals are completed, even on mobile homes with brick underpinning. That 3 bedroom, 2 bath has mysteriously become a 2 bedroom, 1.5 bath overnight. Yes, people are going to jail, but the cost of doing that kind of business is much less than profitable.

Are modular homes a good idea! Absolutely, if you are buying one that looks like a Colonial, Cape Cod, English Tudor, two story, L-shaped regular kind of house. You get the drift, I’m sure. I once refinanced a house on Lake Wylie in the same neighborhood that Larry Johnson lives in (former Hornet). That was a $650,000 modular home and no; it did not look like a really big mobile home! You would never know it was a modular home.

Don’t think that investing in a mobile home park, with or without mobile homes is a bad idea, that is a commercial type loan and it is still a very good investment. All I am saying is to do your homework with a lender who has seen the appraisal and then approved the loan before putting any money down on a modular home. If you should have a question about it, please don’t hesitate to contact me at 803-831-2856. That is what I am here for!