It takes most customers awhile to shop for a new home. When they’re finally ready to build, the last thing they want is to be slowed down by some unanticipated steps. Unfortunately, that’s what usually happens. Most customers are surprised by these delays because they haven’t given enough thought to what they need to do be ready willing and able to build a modular home.
Are You Be Ready Willing and Able to Build a Modular Home on Schedule
- Start a new job
- Get married
- Welcome a new baby
- Say goodbye to your oldest child
- Receive an inheritance
- Receive an insurance settlement
- Close on the sale of your house or have no house to sell
- Home style
- Home specifications
- Modular dealer
- Scope of on-site contracting work
- General contractor
- Purchase or receive as gift
- Zoning board
- Planning board
- Septic design
- Building Permit
- Lender financing or a sufficient source of private funds
- Acceptable debt
- Acceptable credit
- Cash to cover
- Mortgage down payment
- Bank and legal fees
- Carrying costs during construction
- Dealer deposit requirements
- GC deposit requirements
Some of the steps might only add a day or two, but others can delay you months from being ready willing and able to build a modular home. The sooner you identify where you stand with each, the sooner you’ll be able to form a realistic schedule and begin working on overcoming any obstacles.
Don’t Wait Until You Are Ready Willing and Able to Build a Modular Home before Signing with the Dealer
One final word. Even if you’re facing delays, I recommend that you sign a contract with the dealer and contractor as soon as you’ve made your selection. Otherwise, you may unwittingly create even more delays. To protect yourself, make sure your contracts include the contingencies mentioned in my 12/7/11 blog, “What You Need from Your Dealer – Part 1, Legalese”.
Modular manufacturers prefer to be paid cash on delivery (COD), and many only accept these modular home payment terms. But most modular home lenders prefer to make the final payment after the home is set on the foundation. The way most manufacturers and lenders reconciled their conflict is by using an “assignment-of-funds” procedure that legally commits the lender to paying for the home after the modules are set on the foundation.
What Can Happen If Your Lender Won’t Accept the Modular Home Payment Terms
When a customer selects a lender we haven’t worked with before, we contact it immediately after the home is ordered to ensure the lender’s modular home payment terms includes our assignment-of-funds procedure. It seems that every year one of our customers completes their application, gets approved for their loan, and is ready to close before we all realize that the lender will not follow the procedure. This is in spite of the fact that we send the lender and customer a copy of the assignment-of-funds letter soon after the customer orders their home. Even our follow-up phone call to the loan officer to review the procedure doesn’t prevent the problem. We’ve found that some loan officers say yes to our procedure without first running it by their manager. So we now ask the officer to discuss it with whoever is empowered to make the decision.
Sounds simple, right? Well, we once ran into a problem just before the closing when the lender’s manager was overridden by its attorney. Not even giving the lender the names of the many other lenders in the area that were comfortable with the procedure was enough to change its mind. My customers had to start over at another lender, which caused them to fall almost two months behind schedule.
Make Sure the Lender’s Attorney Accepts the Modular Home Payment Terms
Perhaps the lesson to learn from this is to make sure that the lender’s attorney is on board with the assignment-of-funds procedure. But another lesson is that no matter how vigilant you are, you still may be hit with a frustrating surprise. My best advice, if this happens to you, is to follow the example of my customers, who to their credit were able to hold onto their patience and good humor even though they lost six weeks applying with another lender.