Article Written By:

Krysta Taylor

Building A New Modular Home in PA

How do interest rates impact Modular vs. site build home costs?

With mortgage rates on the rise in 2022, this is a question some homeowners are asking.

According to CNBC, the average rate on a 30-year fixed mortgage increased by 26 basis points in March and is expected to continue to climb.

This spells trouble for those who are looking to finance a home in 2022.

To make an informed decision, homeowners will need to assess how modular vs site build home costs are impacted by rising interest rates.

Many will find that manufactured homes can provide a more affordable option for homeowners who need to reduce the monthly cost of their mortgage.

Modular vs. Site Built Home Mortgages

Your home mortgage is likely the largest and longest term loan of your lifetime. So, it is important to know how your home mortgage will affect your monthly bills.

Knowing the specifics of home mortgages makes it easier for homeowners to choose the right options for their lifestyle.

A mortgage is a loan from a lender, usually a bank. Homeowners like you will borrow money to finance their home and promise to repay that amount plus an agreed upon interest rate.

Become a mortgage expert by learning more about the top five home mortgage terms.

There is no difference in the home financing process between modular vs site built homes. But specific aspects of the mortgage can affect each choice differently.

How Increased Interest Rates Affect Your Mortgage

When you take out a loan, a portion of your monthly payment is based on the overall amount of money you are borrowing. And a second portion of your payment is based on the interest rate.

That’s why, it’s important to note which interest rate type is attached to your loan.

A fixed rate mortgage will offer you one stable monthly payment for the duration of your loan.

An adjustable rate mortgage will often give you a low teaser rate for a set time period and then the rate changes based on national trends.

For two years, those with adjustable rate mortgages have enjoyed lower payments due to lower than normal interest rates. But with interest rates on the rise, monthly adjustable rate mortgage payments will begin to steadily increase throughout the course of this year.

Those with fixed rate mortgages did not enjoy the lower monthly payments over the past two years. But their monthly mortgage payments will remain the same as interest prices continue to rise.

How Interest Rates Affect Renovations on Site Built Homes

When homeowners choose to update and upgrade their homes, many borrow against their house through a home equity line of credit. This loan is separate from the mortgage and has different terms.

Many home equity lines of credit operate with adjustable rates, making payments fluctuate with market interest rates.

The choice between buying a new modular home vs site built renovation might look a little different now due to the price of lumber skyrocketing.

If you have an older home, you may consider looking at a new modular home instead of renovating your current home.

Modular vs Site Built - Which Can Reduce the Cost of Your Mortgage?

When you’re deciding between modular vs site built, it’s important to consider which will reduce the cost of your mortgage.

As interest rates rise, so do monthly payments.

To reduce the cost of monthly payments, you may choose to buy less home. This can save you money overall while costs continue to skyrocket. Not only can you save on the cost of your mortgage, but it can also translate into energy savings.

cost of modular vs site built graph

How Modular Homes Can Help Reduce Your Mortgage

There are many costs associated with building a new home. Fixed cost items like land, utilities, driveways, etc are mostly out of your control. There is little that you can do to cut costs in these areas.

This is when it’s important to assess the implications between modular vs. site built homes.

To compensate for the increased cost of building a home, you will have to choose between building a smaller house, or buying a manufactured home.

Even including all of these fixed price increases, buying a manufactured home still costs less than building on site.

Because there is a 30% pricing gap between stick built homes and manufactured homes, you can often get more bang for your buck when choosing a manufactured home.

Learn more about why you should choose manufactured housing.

Modular vs. Site Built Home Construction

Many people don’t understand the similarities between modular vs. site built home construction.

Modular homes compare to site built homes in a variety of ways. Both are built to the International Construction Code and are bound by laws set forth by government.

While site built homes offer a custom approach, there are many ways you can still customize your manufactured home. Manufactured home designers offer a variety of styles that can be customized and enhanced with decor and color choices. In addition modular builders are often receptive to custom floor plans.

Modular homes can look exactly like a site built home. Just like site built homes, there are a variety of options available to fit each buyer’s preference. Windows, doors, cabinets, fixtures, flooring, fixtures, countertops, roof pitch are all things that can be customized to the buyer’s preference.

The big difference between modular homes and site built homes is the cost. On average, manufactured homes will cost between $90 and $120 per square foot, while site built homes can average more than $150 per square foot.

The reason for the price discrepancy is because modular home builders can take advantage of purchasing materials in bulk. They pay less for the same construction materials and then pass that decreased cost onto the buyer.

So, it can be argued that construction cost is the only major difference between modular vs site built homes.

Working with Riverview Homes

If you have made the choice to save on the cost of construction, it may be time to find a reliable modular home manufacturer. That’s where we come in.

Let’s face it. Finding quality housing that fits your budget, lifestyle and timeline is challenging. At Riverview Homes Inc., we’ve spent the past 50 years helping families through the home buying process.

It matters to our family that yours has a great home buying experience. To make the home buying process as simple as possible, we provide priced, unlocked, decorated, and ready to view model homes at six different convenient locations.

Let us use our experience to help you make the best decision for you.

At RHI, customers like you are our highest priority.

We look forward to the privilege of serving you.

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