Is the Financing Crisis Truly a Crisis in the Minnesota New Home Construction Market?

Is the Financing Crisis Truly a Crisis in the Minnesota New Home Construction Market?

We all know how difficult this past year has been for many business sectors, but believe it or not the mortgage loans for modular homes were fairly accessible.  In my dealings with new modular home customers this past year the approval portion of the loan was not difficult, but the appraisal portion got tricky at times.

For those who are not familiar with the appraisal process, in a nutshell it goes like this.  When you are requesting a loan from the bank they need to know the new home project you are proposing fits in with the value of other similar homes in your area.  The appraiser achieves this by finding comparables (similar homes) in that particular area.  With the down market, homes are selling for less and thus bringing down the amount of current value on a new constructed home.   This is where I have seen the main mortgage loan problems occur.

One way to combat this problem would be to own your land free and clear and/or have a large down payment.  Even though the market is down currently it will eventually stabilize and values will rise.

Basically, I am saying don’t let this down market affect your decision on doing a new home project, because the most important thing is to not compromise.  You are spending a large amount of money on a new home and you should make it the way you want.