What to Consider When Choosing Modular Homes

modular home

There are significant differences in homes built on-site and modular homes. Knowing the pros and cons of modular homeownership will ensure that you are making the right choice for both you and your family.

Don't confuse modular homes with mobile homes. Mobile (manufactured) homes are factory-made, built on wheels, and delivered to the site attached to semi-trucks. They are single-story homes only and come in one to three sections. Modular homes are also built in a factory, in sections, but these sections are placed on a flatbed by crane. They are then assembled on-site, also by crane. They can be one- or two-story homes.

Pro: Faster Construction

Unlike on-site built homes, where weather, inspections, and subcontracting delays are common, a modular home is built in a factory. The building timeline is more precise. The factory is set up as a large assembly line system in a controlled environment devoid of weather conditions. The system of inspections is scheduled based on a set process of construction. All supplies, building materials, and tools are in the factory. Subcontractors are not required. That speeds up the building process substantially and allows for an accurate finish date.

Pro: More Affordable

In the construction of on-site homes, the longer the project takes, the more it will cost. Economic variables in wages, subcontractor requirements, and availability create a competitive market, thus creating cost variations. Not so with a modular home, since everything is done in-house.

Pro: Greater Selection

When buying an on-site home, options are always minimal, unless you are able to afford a custom home. Most modular manufacturers offer an extensive variety of floor plans, designs, and models from which to choose. From contemporary to traditional, ramblers to two-story, you won't be wanting for choices. Many of the country’s finest architects have been retained to design modular homes with current design trends.

Pro: Creative Financing

Some modular home manufacturers provide in-house financing, so you won't need to find a mortgage lender. One caveat is that this method of financing may be more convenient, but the interest rates may be higher.

Con: Land Requirements

Unlike a new home built on-site, the builder has already found the land, prepared it, and it is ready for you to buy. Modular home ownership requires that you find the land, bring in the proper infrastructure such as water, a sewage system, and electricity. Some counties have specific zoning restrictions that do not allow modular homes to be imported into their communities. Modular homes are labor-intensive for owners. Costs can add up quickly; be sure to include that in the budget.

Con: Lender Restrictions

Some lenders simply do not finance modular homes. In the past, many folks going this route had to finance with personal loans at crazy interest rates. Today, more lenders are willing to consider your financing needs, but only if your home is being placed on a concrete foundation.

Con: Limited Equity

Though modular homes are slowly increasing in value, they will never have comparable market value as a standard, on-site constructed home. That means your equity will not grow as much over time and could "cap" no matter how long you have owned it. The one solidly competitive real estate variable is the land upon which your home will rest.