What is a Land Home Package?
What is a Land Home Package? | Manufactured and Modular Homes
A Land Home Package, as I know it, is a term that is primarily used in dealing with the purchase for a manufactured or modular home. In essence, it is a construction-to-permanent financing loan, which means that you have two closings before you are converted to a permanent, fixed rate loan.
Your first closing will allow you to withdraw, or "draw" funds allocated by the bank...at their discretion based on their schedule. Much like a line of credit, it will be an interest only loan. When you buy your land, you will take your first "draw" in the amount of the purchase price (of the land) to pay the seller. At that point you will have your closing and will begin the interest only payments on the amount you have withdrawn.
Next, you will follow up by beginning construction of your home. At this point you will take additional draws in order to pay for; the foundation, septic tank, well, clearing etc. up to the appraised, or loan amount you have been approved for. Keep in mind that you will be paying interest based on how much money you have taken. Once your home is completed and you get your Certificate of Occupancy (or CO) and will then have your second closing. At this time you will be converted into a permanent financing structure with principal and interest payments combined, or amortized, over the term of your loan. This loan product makes for an ideal situation for modular or manufactured houses because the construction process is typically much quicker than a site built home. Therefore, costing you less interest. Builders use an identical product referred to as a "construction loan".
The appraisal process on a "land home package" consists of two appraisals. A term known as a "Subject To Appraisal" is commonly used among SC appraisers to identify this procedure. The initial appraisal is how much the value should be in the home when the project is completed, then the follow up appraisal is done after everything is complete and you have a finished product. These appraisals tend to be slightly higher than a typical appraisal but shouldn't exceed the cost of two single appraisals combined.
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