I am beginning to consider building a modular home but I have a question regarding appraisal. Assuming we use the terminology from the home database, will the home be appraised on the base price (price to manufacture) or the estimated price (finished job price). My concern would be that if the home is only appraised for the base price, then the lender is going to reduce their amount, and I would be required to pay the difference. Also, if you are willing to share, how did your home appraise compared to the final price of the finished job? What was the appraisal process like?
Hi Sam, Welcome to the forum and thanks for your great question! Appraisals on modular homes work the same as they do for site-built homes - that is to say that the appraisal or appraised value of the home is based on the finished home. Your lender will be giving you a mortgage on the whole home, not just the modules that are being prefabricated by the factory. This mortgage is based off of the "pre-construction appraisal" which is generally determined by your lender using the specifications that your builder provides. So your concern about having to personally foot the bill for the difference between the base price and the estimated final price is understandable, but not an issue! The lender will be giving you a mortgage based off of the total estimated value of your home! It is worth noting that it is possible for a pre-construction appraisal to be different than the appraisal once the home is completed. If you have made any changes to design of the home during the construction process, it's not uncommon for the appraisal to change. If anyone else wants to weigh in to address Sam's final two questions, I'd love that!
