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Financing Your Home and Land
Shop for the loan that best fits your needs...
Financing your home and land as a package is one of the most affordable ways of buying a manufactured home. There are numerous loan programs to choose from, including federal plans with low down payments and loan terms of up to 30 years.
Shop for your loan as carefully as you shop for your home. Loan terms, interest rates, and even the basic structure of the land package loan can vary according to the lending institution. Some may limit the loan size, while others will not finance a package in which the land costs more than the house. Some programs offer two-phase, construction-type loans which pay for the lot and land improvement costs first, and then finance the entire package costs after completion. Other loans finance the entire package costs after completion. Other loans finance the entire package at once and do not close until all work is done.
Estimate your loan needs and qualifications...
When you start searching for you home and land, you will want to determine from the start the amount of loan you need and can afford. A lender cannot guarantee you will qualify for a loan until you fill out an official loan application, but he or she can help give you an idea of how much money you may be able to borrow. Your lender also can tell you about different types of loans, approximately how much money you will need for a down payment and closing costs, and how much your monthly payments will be.
Apply for your loan when you've found your home and land...
You can apply for your loan when you have selected your house and land, and know how much the home, land and site development will cost (See worksheet on page seven.) The loan application process generally begins with a completed cost worksheet of all items, a signed credit application, an application fee to be applied toward closing, and a signed verification of employment and the amount of monies in your bank account. You also will need to decide the type of loan you want, whether your interest rate will be fixed or variable and the length or term of your loan. After application, approval may take anywhere from a few days to as long as several months for an FHA loan.
When your loan is approved, begin site improvements...
When your loan has been approved, your lender will give you a letter of commitment which commonly spells out conditions for approval. One condition will be that your land package appraises at a value equal to or higher than the amount of the loan. An appraisal of the package will be done before the home is built, based upon house specifications provided by the dealer, the qualities of the land, and the values of existing homes in the area.
Once the appraisal and other conditions of the loan are met, you will be able to proceed with the development of your land. At this time, if you have taken out a two-phase, construction-type loan, you will be able to buy the land and pay the contractor for site improvements. If you are getting a one-phase, traditional land package loan, you will simply begin development work. As the footings and other improvements are made and the home is sited, inspections and sign-offs will be required by the building department, dealer, health department, and other interested parties. When this is complete, you are ready to go to closing.
When the work is complete, close the deal...
Closing takes place at an independent escrow office where all land package documents come for final review and signature. All remaining funds from you are now due, including any balance of down payment due, lenders discount points, closing costs and escrow fees. The escrow office will disburse all funds due the dealer, land owner and contractors (if a one-phase loan) soon thereafter. You can now move in!