| Can the “Factory Built Industry” help homebuyers and real estate business professionals during an economic decline? |
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by Susan Frost
That said, there are opportunities for growth. Let's look at a variety of scenarios, and see how manufactured and modular home retailers can address the various needs of each group noted below. Realtor… I have been working double time to identify prospective homes and write offers only to learn that the homes are in poor repair or bidding wars are an obstacle for my client. I cannot seem to get an accepted offer; and, I cannot seem to get a deal to the closing table. Now my clients have another option that delivers a newly constructed, custom factory built home at an affordable price. Homebuyer… I was pre-approved for my loan; and I obtained an accepted offer, only to learn that yesterday's loan underwriting guidelines had changed and I could no longer qualify. The FHA One-Time Close Loan is approved and locked in prior to construction and I have peace of mind knowing it's a done deal! Homebuyer… I am weary of searching over months. I give up. Maybe I'm not meant to own a home. Land/Home option may fill their need and we have financing opportunities that team Private Construction loans with FHA insured permanent loans. The FHA One-Time-Close Loan removes obstacles CASH TO CARRY THE PROJECT Traditional construction loans are based on loan to cost of construction; and currently require 20% to 40% cash to carry their project to completion. FHA 1xCLOSE
Maximum loan is calculated on total cost of acquisition. There is a minimum 3.5% down payment requirement; and, borrower can use available land equity to satisfy this requirement. (20% of the transaction is held to completion, including Retailer profit.) QUALIFYING Qualifying standards on traditional construction loans call for strict 28/38% debt ratios. FHA 1xCLOSE Qualifying standards are based on normal FHA underwriting standards. (Up to 30%/45% total debt ratios. Exceptions up to 50% on a case by case basis) LAND EQUITY REQUIRMENTS Typically construction lender will require 25%-50% minimum land equity. FHA 1xCLOSE No land equity requirements. (Note: There are land cost to home cost requirements.) APPRAISAL With two loan closings, the appraised value is subject to market fluctuations prior to completion of construction. FHA 1xCLOSE One appraisal. One loan closing. All locked in prior to commencing construction. FINANCING COSTS Two separate loans means duplicated escrow, appraisal, prepaid finance charges and more cash required to carry the project forward to completion. FHA 1xCLOSE One loan closing means savings on escrow, appraisal, prepaids and less up-front cash required to complete construction/set-up. (Cost for construction financing and up to 6% normal borrower closing costs can be wrapped into the acquisition cost of home. Maximum 96.5% loan amounts available.) The factory built industry is poised for a comeback. Right now is the time to consider the opportunities before us and to plan your marketing strategy. QUALITY, INTEGRITY and long term VALUE are the most important considerations to obtaining good financing terms for our borrowers. The Factory Built Homes can deliver stylish design at an affordable price; and, we can emerge from this time as the preferred new home construction of the future.##
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Industry news has reported on an over abundance of REO's and short-sales that will eminently hit the market; yet, realtors are challenged with lack of inventory and a lack of financing. My loan production board has a long list of “existing home” buyers that are unable to negotiate an accepted offer on existing site built homes. The competition is immense and “CASH IS KING!” 
Sue Frost is President of Alliance Mortgage and Marketing, a wholly owned subsidiary of I.F. Independent Financial Corporation. Mortgage Broker, CA DRE #01002275, WA #510-MB-47498, OR #ML-4905. She is a 26 year veteran to mortgage lending and has a passion for helping people achieve the wealth building opportunity of home ownership. Susan's firm is based in California and is also servicing Oregon (with a forward vision to service the western United States.) Find Frost's firm online at 
