Out of the gate, it’s incredibly important to make this distinction: Modular homes and manufactured homes are not the same thing, at least as the VA home loan program is concerned.
Manufactured homes are mobile homes, which typically come in single-wide and double-wide form. Modular homes are built in sections in a factory and transported to the site. Local contractors typically assemble the pieces, and the finished home is then inspected by local housing officials to ensure it meets codes and standards.
In general, modular homes are likely to appreciate in value over time. Manufactured homes, meanwhile, are likely to lose value.
And here’s the big difference for VA borrowers: Using your home loan benefits for a modular home is typically much, much easier than for a manufactured home.
As a number of readers have come to know in the last few months, it’s pretty tough right now to find a VA lender willing to loan on manufactured housing. There’s more risk with these properties, from the likelihood of longterm depreciation to issues with delinquency and foreclosure. After the housing market collapse and subsequent foreclosure crisis, lenders are still skittish and unwilling to take on what they may see as unnecessary risk.
I can provide a list of financial firms I know to have loaned on mobile homes in the past, but I’m not sure about their present lending environments. In many cases, veterans and military families will secure financing from a manufacturer or a personal banking institution.
Modular homes are a different ballgame.
The finished pieces remain inside of the factory and aren’t exposed to outside conditions until it comes time for transport. Depending on the look, it’s sometimes tough to tell a modular home from a traditional single-family residence. And unlike manufactured homes that must only meet a standard U.S. Housing and Urban Development (HUD) housing code, modular homes also need to satisfy local regulations.
The process for using your VA loan entitlement to purchase a modular home is simply the standard procedure: Prequalification, Preapproval, Contract, Underwriting, Closing and House Party.
Talk with a loan specialist at 888-212-1958 if you’re interested in pursuing a modular home purchase. You can also drop me a note at firstname.lastname@example.org.
Photo courtesy of Team Massachusetts