Manufactured Home - Bridge Financing
When developing a property, having enough cash to get from start to finish is often the biggest challenge...

As a dealer/installer or a home buyer, when you purchase a manufactured home direct from the factory (or from a private seller), in many cases full payment is required before the home can be loaded for trucking. This can be problematic if mortgage financing is funding the new build and those funds are only available AFTER the home is on site and ready for occupancy, as is normally the case. If the factory/seller is able to supply temporary financing or trade credit, that's great and may solve your problem. If the requirement is full payment at the factory gate, this could create a short-term cash shortage issue for the buyer until the mortgage money kicks in after trucking and setup. That problem could potentially be solved by borrowing temporarily from a family member or from a 3rd party via a "bridge loan."

New Residential Land Development Mortgage Financing Guide

Mobile Home (2)

A Bridge Loan is exactly as it sounds, a temporary loan to get you from one place to another, and in this case, your home from one place to another. The cost of the bridge loan is simply considered a necessary project cost.

Whoever provides the bridge loan will likely have some questions. For example, when do they get their money back! Here's a bigger list including some items that you might not have thought about:

  1. Is there a mortgage approval in place that will fund without issue once the home is delivered and bank-inspected?
  2. Is a building permit in place?
  3. Is the foundation for the home and utility services ready for arrival?
  4. When is the mortgage expected to fund?
  5. Does the buyer have enough cash for the other development expenses ( foundation and services) to get to the mortgage-funding stage?
  6. New Home Warranty is required by mortgage lenders - does the factory offer this?
  7. Does the trucking company who is hauling the home from factory to building site have valid cargo insurance that provides for full replacement cost of the home in the event of upset? (called a "valued-bill of lading")
  8. Does the trucking company have set-up insurance to cover risk during off-loading and set-up at the building site?
  9. Do you or your contractor have "course of construction" insurance to cover the home after setup and before the homeowner's insurance policy can kick in? (NB: a homeowner insurance policy can only kick in after an occupancy certificate is issued by the local building inspector.)
  10. Can the homeowner get property insurance without delay, else mortgage can't fund? (example, no insurance will be offered if fires burning in area!)
  11. Are there any liens against the home you are buying that need to be discharged first?

If you can answer all these questions, then you have a good handle on all the risks that might get in the way of completing your new home project. If you require an information sheet on our bridge financing program, please contact us.

Residential Land Development Mortgage Financing Guide

   

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