Modular Homes HQ

If you are interested in building a modular home in the near future, then financing your construction project will probably be part of the process. It is never too soon to begin your research into the financial aspects of the building process, in order to be prepared for what some have termed the most challenging part of building a home – financing it. This is the first of several articles that will take you through the steps to financing your modular home.

When you have decided to build a home, regardless of what type home, financing the home will be the first step, and will begin long before the home construction begins. So much depends on the financing of your home that you should begin the financial process of a new home construction up to a year in advance.

The very first step in the financial process of financing your new home construction will be to check your credit. Your credit history and credit score will determine many aspects of the financing of your new home, therefore, it is important not to be surprised when you begin the construction loan process. Your credit history and credit score will determine everything from the amount of money you can borrow – which in turn will affect the home you build – to the type of loan you can take out.

You have the right to one free credit history report per year by law. If you have not taken advantage of this service for one full year, click on the free annual credit report website to get a free credit report from this safe, secure service. If you have gotten a free credit report within the last year, then visit either of the three credit reporting agencies - Transunion, Experian, and Equifax – to purchase your credit report. You can also purchase your credit score from these credit reporting agencies.

Both your credit history and your credit score are very important when it comes to financing your modular home. While your credit score is what lenders use to determine how much you can borrow, what interest rate you qualify for, and how long the loan term can be, it is your credit history that this score is derived from. If your credit score is not as high as it could be, use your credit history to see what could be done to improve it. For information about improving your credit history, visit the Consumer Credit Counseling Service”. The Consumer Credit Counseling Service is a non-profit, nationally recognized service that assists people with understanding, improving, and protecting their credit history.

Beware, however, of commercial “credit counseling” agencies that charge exorbitant fees to raise your credit score – these are rarely effective or financially sound.

If your credit needs improving, expect to spend at least one year at this task. This typically means spending one year paying bills on time, paying down high credit card balances, and avoiding applying for additional credit. After spending this year improving your credit, begin the process of checking your credit report and score again. It is often worth it – in terms of money saved in interest and other fees – to spend a year improving your credit score before contacting lenders to finance your new modular home construction project.

For the first-time homeowner who is interested in building a home, Fannie Mae offers a database of homeownership counselors who can help you with the process of getting ready to build your new home. The “counselor search” feature at Fannie Mae is available here. Fannie Mae also offers a Lender Search that will allow you to find a Fannie Mae lender near you.

While the process of checking, improving, and building your credit may seem time-consuming and difficult, you will be glad you did so. Being prepared will prevent you from being surprised – and possibly disappointed – when you approach lenders for financing. Having a good credit score will allow you to have more financial options to choose from, and will allow you to build your home for less money over time, making your home more affordable, and allowing you to build more home for the money.

For more information about financing your new modular home, read the next article in this series, “Financing Your modular Home, Part 2 – New Home Construction Financing,” to see where to go next on your road to building a new modular home.

Tags: credit report, financing your modular home, modular financing