The Financing Options
The two main options most people use in getting the funds to build your own house are a single close and two close loans.
Also called a combination loan, the one close loan is both a construction loan and a permanent loan rolled into one. The advantage here is simplicity; a one close loan means that you shop for funds only once, and you pay only one set of closing costs. The disadvantage is that once again you are paying for convenience; someone is making money off you that could be saved by shopping around. Construction loans are simpler, but they have the potential to cost a bit more.
A two close loan sounds just like what it is; two entirely separate loans for two different purposes. The first is a construction loan, used to finance the building part of your project. You pay points and closing fees on this like any loan. This is then rolled into a permanent loan, which you must apply for separately of the construction loan. A good bit more legwork involved here, but you have the freedom to shop around for the best rates on both construction and permanent loans.
Single Close Loans Have Become Difficult to Find in the Market Due to Losses suffered by National lenders. Our resources continue to work on developing new programs and lenders.
There are other methods of financing your Manufactured House. The only thing that really limits you is your imagination. Some people tap into savings, home equity lines of credit, friends and family, and even their own credit cards for the construction monies. This helps them avoid the hassles of getting a construction loan and paying all of the associated fees. If your land is paid for and you can get short term access to $60,000 - $100,000, you can skip the construction loan step. Once the construction is complete and the house has been inspected and approved as a permanent house, your permanent mortgage will take over and you can pay back your short term financiers.
What Method Should I Use?
We like two close loans, for several reasons. Construction loans can be a tricky business, and it pays to have someone doing it that is both experienced. Construction loans involve routine inspections to make certain that things are progressing as they should be; coordinating inspections, payment vouchers and contractors all with someone that lives 200 miles away can be a horribly troublesome process. We have yet to find someone in Big Bear who handles combination loans that has any experience with construction loans.
We also like two close loans because it gives you the freedom to get a permanent mortgage from who you like. Hop into a combination loan and you will not be able to shop around for the best permanent rates, and you will have no choice of your mortgage company.
Two close loans will have more legwork and paperwork involved for you. We also feel that they give you the most freedom, the lowest rates, and the most experienced loan officers.
In Big Bear we recommend First Mountain Bank as a construction loan source. Security Pacific Home Mortgage works closely with First Mountain Bank to take over the permanent loan, so they are a great source for your mortgage. We have construction and permanent loan packets from both of these lenders that we would be happy to pass on to you, or you can stop by and talk with the people there yourself.
If you head over to our Links page, you'll find several other great sources for loans. The Big Bear phone book will point you in the right direction as well.
Our only concern is that you find the lending situation that suits you, at a rate that suits you, and with people that know what they are doing. We are not affiliated with nor do we receive any consideration from any financial institution.
