Modular Home Loans
Locking Your Modular Home Loan Interest Rate
The rate lock is the formal acceptance of the loan interest rate for your prefab house mortgage. The rate will determine your monthly house payment. If you lock your rate and the rate drops, banks might adjust the interest rate. Before closing ask if the rate lock can be adjusted. If interest rates go up, you will be protected from a higher modular home mortgage.
- Floating Rate - Before you lock your interest rate in for your prefab house, the rate is floating. The rate goes up an down. It common for construction loans to have a floating rate, it is a short term loan when you are building a prefabricated structure.
- Construction Rate - The construction rate is the interest rate used to calculate your interest only payments while your home is being constructed. Depending on the bank this can be a locked in rate or a floating rate.
- Locked Rate - A locked rate is the security of knowing what your monthly mortgage payments will be. A locked rate protects you from an increase in the interest rate for your mortgage.
- Rate Lock Fee - Some banks will charge a rate lock fee to lock your interest rate. Traditionally this 1% of the mortgage amount. This fee is collected prior to the settlement of the loan.
- Construction Loan Deposit - Another fee banks charge is a 1% construction loan deposit. This fee is collected at closing to offset any modification fees. The 1% construction loan deposit is not to be used to lock your interest on modular homes permeant mortgage.
- Expired Rate - When you lock your rate in it is for a predetermined number of days. Usually around 180 days to build a modular home. Six months is a safe period of time to order and finish a prefab home. If the rate lock expires, a new rate will determined at current interest rates - if the original lock rate is higher, this is the rate you will be charged.