Easy Home Building Financing Found In Panelized Kit Homes: Understand the Ins & Outs Of Packaged Home Financing

Do you have some credit challenges? Have you had a bankruptcy? Are you worried a bank won't finance your home building dream? Then, you might do well to consider a kit home or panelized home. Why? If you find the right company, they often have easier access to financing for the borrower/builder with credit challenges.nnYet, you shouldn't think that kit home companies are for limited markets and financially challenged clients. Absolutely anyone can be a great candidate for a packaged home and their financing. nnOver the years of helping people build their own dream, custom homes I've had experience with various home companies and financing options and I can shed some light on the processes involved. I'll list some of the most common questions I've received and give you the best answers I have. nnQ: How do they determine who qualifies for these packages and their financing?nnA: To be sure, the housing company is eager to sell you a home but, not unless you can qualify for a construction loan and mortgage. It makes no sense for them to sell a home that they'll not eventually get paid for. nnLike for other credit applications, these home companies check your credit scores, outstanding debt, monthly payments, and income. They also determine the home you want to build, the cost to build it, and the end value once it's erected. These things help them make a decision on whether or not to work with you.nnQ: Who is actually doing the lending when I purchase a home through a packaged home company:nnA: That depends upon which company you're using. It's best to ask them right up front. Most of the time they are using a national lender such as Indy Mac Bank or Countrywide Bank. These banks will provide construction financing to owner builders who often may not use a contractor. There are occasions where the home company will act as its own banker and provide the funding themselves. This is rare, however. nnQ: Will I be paying a higher interest rate when I take the financing they offer?nnA: Generally no, you will not pay more. Since most of the companies use national institutional lenders, the rates are set by the banks at whatever the going rates are. The packaged home company has little if anything to do with what the banks charge and generally do not get a kick-back from the lenders.nnQ: What will the down payment requirement be?nnA: If you've been doing any research already, you may have seen them offering no money down options. This is really possible but down payments are still often required. The way they set up the no money down options is to in effect credit you in advance for the equity you can create once your home is built. Normally, the banks will only loan up to 80% of the final appraised home value. This leaves 20% equity which counts as your down.nnQ: Will I be required to use a General Contractor (GC) to build the home and for me to qualify for the construction loan?nnA: In a normal situation when you build a home, yes, the bank would require you to hire a GC to build your home before they would give you the construction loan. What some banks have done, however, is allow these kit home companies to act as supervisors for your project thereby adding a certain amount of security for the lenders. So the need for a GC is alleviated and will usually not be required.nnQ: Will I have to make payments on the construction loan while I'm building?nnA: Generally no. There will definitely be interest charged on the construction loan but the interest amount will be added to the loan amount so interest can be charged without having to be paid monthly. This can help if you have a payment on another home while you're building the new one.nnQ: How long is the construction loan's term and what happens when I'm done?nnA: Most of the loans arranged for you by these housing companies are between 9 and 12 months. The loan starts at the start of construction and ends when you finish and move in. The construction loan is then replaced by a regular mortgage.nnKeep in mind that you do not usually have to use the financing offered by the kit home company. You may very well be able to arrange for your own financing. It is very important to evaluate the kit home company based upon their quality, service and price and NOT the fact that they have a construction loan to offer you. A quality company will help make your home building project successful. A poor company will bring nothing but aggravation. n