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Tips to Finance Prefab
Building a prefabricated home requires a separate land purchase, which can often be found through the help of a real estate agent. Many prefab builders have agents that are familiar with the process, to which they can refer buyers.
Some builders also have pre-existing relationships with lenders that are familiar with how these homes are built and their unique process.
“You need a lender that’s comfortable and able to run the right comps for the projects,” says Brian Stevens, former principal of ClearSpace Modular Homes in Austin, Texas.
This can be the most difficult aspect of financing your prefab home, since lenders rely on or comparable sales, or “comps,” to accurately determine a home’s value. If you live in a market where there are not many prefab. homes, it may be trickier to find a comparable sale.
Some homes are financed the same as traditional site-built homes because their projects use a permanent foundation and all the walls and panels are erected on site.
Because the prefab. construction process varies from builder to builder, so does its financing.
“There is no traditional lending mechanism for true prefab. homes,” Stevens says.
Much of the financing process depends on the company’s relationship and history with the banks it does business with, he says.
Jason Blenker, president of Blenker Building Systems in Amherst, Wis., says financial institutions have not treated his company’s projects any differently than site-built homes. In some cases, the stability of his prefab company and its product have actually bettered relationships with lenders and eased the financing process.
But, as more companies develop solid working relationships with banks, Stevens foresees the establishment of partnerships with financial institutions, which will simplify the financing process for buyers.
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