What to Expect When Closing on Your Manufactured Home Loan

Closing on a manufactured home is an exciting milestone on the path to homeownership. However, like any real estate transaction, it involves several steps and considerations to ensure a smooth and successful process. Whether you're a first-time homebuyer or a seasoned homeowner, here's what you can expect before closing the deal on your manufactured home with Regional Homes.

Step 1. Loan Approval Process: Before closing, you'll need to navigate the credit approval process. This involves providing documentation such as income verification, credit history, and details about the manufactured home you intend to purchase. Our housing consultants will discuss this process with you and help you gather all the necessary documents to submit, while your lender will review this information to determine your eligibility for financing. You can start the pre-qualification l process by visiting one of our location's websites and clicking the "Prequalify" page.

Step 2 (a). Appraisal - Land Included: Similar to traditional home purchases, an appraisal of a manufactured home will be conducted to determine its fair market value. This appraisal helps ensure that the loan amount does not exceed the value of the property and provides peace of mind for both you and your lender. The appraiser will look at the value of the land and use the plans to compare your home to other manufactured homes in the area. When purchasing a modular home, the appraiser can also use stick-built homes in their comparison. It is important to note that this fee is often paid before closing, so you will need to budget $300-$500 depending on the cost of the appraisal. Sometimes, this fee can be included in the loan itself.

Step 2 (b). Appraisal - Chattel (Home Only) In the chattel appraisal process for manufactured homes, an appraiser determines the home's market value without considering land, focusing on the home's features, condition, and market comparisons. This specialized appraisal is quicker and less expensive than land-included appraisals, costing between $250 to $400. The appraisal's outcome can influence loan terms, such as interest rates and down payment requirements. A detailed report from this appraisal aids in finalizing loan details, ensuring the financing matches the home's worth and securing both the buyer's and lender's investment. Preparing your home and providing documentation of upgrades can positively affect the appraisal value, facilitating a smoother loan approval process.

Step 3. Title Search: A title search will be conducted to verify clear ownership of the land and identify any liens or encumbrances on the property. This step is essential to ensure that the title is free and clear before closing, minimizing the risk of any legal issues down the road. This process typically takes a few days, but can sometimes take several weeks.

Step 4. Down Payment and Closing Costs: Like any home purchase, you'll need to have funds available for the down payment and closing costs associated with the loan. The specific amount will vary depending on factors such as the lender's requirements, the loan amount, and your financial situation, but most often it is between 5-10%. If you are placing a down payment, you will have to submit your bank statements to reflect the cash needed to close. Land can be used in lieu of a down payment in many situations.

Step 5. Loan Terms and Conditions: Review the terms and conditions of the loan carefully before closing. This includes the interest rate, repayment schedule, and any fees or penalties associated with the loan. Make sure you fully understand your obligations as a borrower and address any questions or concerns with your lender or with your Regional Homes representative.

Step 6. Closing Process: The closing process for a manufactured home is similar to that of a traditional home purchase; however it most often occurs at the retail center. Our team will discuss the full inclusions of your purchase, you'll sign various documents, pay any required fees or closing costs, and construction can officially begin (unless you are purchasing a model on display.) Your closing agent will guide you through this process and ensure that all necessary paperwork is completed correctly.

Special Considerations

Well and Septic Permits: If you already own your land, you can apply for your well and septic permits through your local health department. This process can often take months to process, so it is important to apply as soon as possible.

Insurance Quote: Lenders typically require borrowers to obtain an insurance quote to use in escrow. You can shop around for this quote or let us connect you with our preferred insurance partner - Helicon Insurance.

In conclusion, closing on a manufactured home involves several important steps and considerations. By understanding what to expect and staying organized throughout the process, you can ensure a smooth and successful closing experience. So, take the time to prepare, ask questions, and seek guidance from your lender or housing consultant as needed. Before you know it, you'll be holding the keys to your new manufactured home and embarking on the next chapter of your homeownership journey.