As far as banks, lenders, and appraisers are concerned, financing your SmartPads prefab home is the same as any site-built home. Firstly, you’ll obtain a construction loan, which will require you to “put down” approximately 20% of the total estimated construction costs which includes the SmartPads home in addition to all other on-site work and permits required to complete the build. Then once approved you start to pay monthly interest on the outstanding balance of the loan as it increases. Unlike home mortgages, construction loans are interest-only and short-term.
With a SmartPads home, you’ll find that financing the construction period is typically faster, easier, less cumbersome, and less expensive. Here’s how!
With a traditionally built home, the General Contractor (GC) required payments often every 2 week and these payments draw down from the construction loan for the duration of the building period, which is typically 12 to 18 months. This is to cover the cost of things like new materials, appliances, and labor. With each draw, you will need to work with the GC to reconcile each payment to the line items in your budget. It’s a time-consuming and cumbersome process, but essential to keep track of your budget and to be alerted to new contingency costs popping up on the horizon.
With a SmartPads home, you only have four draws (each which are about 25% of the total build cost) over the approximately two months it takes us to build your home. You will receive plenty of savings on interest because our homes are built faster. Both you and bank lenders will appreciate that the SmartPads home is sold at a fixed price, therefore no contingencies on a large portion of your overall budget, which lowers the risk for you and the bank.
When the home building process is completed, you will move from a construction loan to a mortgage. This is the case for both modular and site-built homes.
We would be pleased to introduce you to partner lenders. We’ve been successful in helping to get loan service fees down (which are typically around $500 to $1500) because the lender does not have to do continuous site visits. We send them photos directly from the facility where your home is being built. We currently have a relationship with Vectra Bank with a “one-time close” product. This allows for lower amounts down and a turnkey rollover from a construction loan to a mortgage without having to make another loan application and paying double origination fees. Overall, it’s more seamless and more cost-effective.