Can I Buy a Modular Home With NACA?
If you’re looking to buy a home and had credit problems in the past, NACA or the Neighborhood Assistance Corporation of America is an agency that can help you.
NACA was established to build communities through homeownership.
It requires no down payment and offers sub-prime interest rate loans to people who have had credit problems in the past through a careful screening process.
Can I Get a Modular Home with NACA?
Yes, you can purchase a modular home through NACA, but there are many provisions you’ll need to meet with any home purchased with a NACA mortgage.
NACA’s Mission
NACA is a program established as an alternative to low-income, financially challenged people who were often victims of predatory lending institutions.
They found that people suffering from financial problems can regain their credit, and become productive members of a community.
NACA does this by offering homeownership to people who otherwise would never have been able to get a loan or consistently make payments on it.
Benefits of a NACA Mortgage
- No down payment
- No closing costs
- No points
- No fees
- Below market 30-year fixed rate
- No credit score checks
- No balloon payment
- No pre-payment penalties
Getting a Modular Home with NACA
NACA allows the purchase of a home on land the prospective mortgage holder already owns or allows the simultaneous purchase of a home and land in one transaction.
You can be making payments on a piece of land you wish to place your modular home on, but it will remain a separate mortgage.
During the NACA review process, they will carefully examine all your financial records, especially something as significant as a mortgage on what could be an expensive piece of property.
It won’t be a deal-breaker, but you’ll get advice on whether it is possible to continue with two mortgages or if you won’t be eligible for the NACA loan since you’re already overextended.
Modular homes are allowed and even encouraged by NACA.
The goal of NACA is to improve neighborhoods with established families, living in the homes they offer funding for. A modular home easily meets these criteria.
Many civil engineers consider modern modular homes to be better constructed than traditional stick-built homes.
First, they have stricter guidelines to follow and are more closely monitored than a traditionally constructed home.
The Universal Building Code (UBC) is applied by every municipality, be it a town, village, or city in the United States.
This ensures quality construction techniques have been followed and the home will be safe.
Modular homes meet those standards, if they did not, their market share would be limited since some areas would not allow them due to inadequately meeting the UBC requirements.
In rural areas, without building codes, a prospective homeowner may not know what they’re about to buy, but if it is a modular home, it will meet standards.
The Difference Between Modular Homes and Double-Wides
All types of homes, even double-wide trailers, are allowed, but know upfront that NACA discourages double-wide trailers, and likely will find a way not to offer funding on them.
Their reasoning is that NACA is designed to increase the value of a person’s property, thereby increasing the overall property value of a neighborhood.
A double-wide is the only type of home that decreases in value after you purchase it.
Double-wides have titles, just like a vehicle does.
As such they’re considered mobile, that is, they can be moved. This defeats NACA’s purpose of creating stable communities since someone could bolt the wheels back on the trailer and drive off with it.
Technically you could set the double-wide on a foundation, attach it permanently and it will meet the NACA criteria, but odds are, they’re not going to fund it.
The Modern Modular Home
A modular home is different. They are homes, there is no title, they become part of the property deed when they’re set.
Modular homes arrive in sections on semi-tractor trailers, but they don’t have wheels under them.
A crew of trained professionals moves the modular from the truck to the new foundation, then attaches the sections together permanently.
In the process, they’ll finish the roof, do the internal drywall work, and attach siding to seamlessly meld the various sections together.
Finally, they’ll hook the modular to water, sewer, gas, and electric utilities and you’ll have a new home ready to move into.
Frequently Asked Questions
Can I use a NACA loan to pay for the foundation construction before the modular arrives?
No, NACA will not pay up front for any work. The work must be complete, with the modular home set on the property permanently before they release funds.
Can I buy a modular with NACA and put it on my father’s property?
No, you must own the property outright, or purchase the property and the modular at the same time.
If you jointly own the property with a family member, you can get a NACA loan for your modular and place it on the property since you are a co-owner.
Having the land owned by someone else, even a close family member, and you owning the modular home on that land complicates the lien process.
NACA must retain the ability to call the note, foreclose on your mortgage, or place liens on the property if the mortgaged person doesn’t meet their obligations.
Having one person own the land, and the other own the home creates an untenable situation.
Can I include a driveway, garage, fencing, and landscaping in a NACA loan with my modular?
This is a tricky situation. You can roll all those costs into a NACA loan, but they still have to be in one transaction.
If you have a contractor willing to carry the costs of a driveway, garage, fence, and landscaping, along with the modular foundation construction until the modular is set and permanently attached, yes you can do this with a NACA load.
The odds aren’t in your favor since this is not a quick process, and may take many months to complete.
Most contractors don’t have the wherewithal or the inclination to carry their clients that long.
You may have to do some serious planning to get this accomplished.
It is possible that the modular supplier has an added benefits package with their total home cost. This is one way to pay for these enhancements.
What if I already own the property and the modular home, can I use NACA to build improvements?
Yes, NACA will fund this if you can prove the additions will increase the value of your property.
Enhancements like barns, shop buildings, attached, or detached garages are all eligible.
NACA has provisions for renovations and repairs, which you could argue these additions are.
Final Thoughts
NACA was established to help people purchase property, enhance the value of an area, thereby improving the quality of neighborhoods and eventually communities through the benefit of home ownership.
There are many steps involved in the process.
You will meet with a NACA representative who will ask for every bit of financial information you have, including information from any family member who may have their name on the mortgage.
It is a process that is worth the effort, and the purchase of a modular home with NACA funding is a great step in improving the value of your property while increasing equity.
