What is a Modular Home?

Jan 8, 2022

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A modular home is one that was built in pieces in a factory before being transported to the house site for assembly. Modular homes are assembled per the International Residential Code and must be set on a permanent foundation. 

In this article, we will explore what modular homes are by definition and clear up some common misconceptions. We will look at how they compare to traditional site-built homes, as well as the benefits and different things to consider when looking at modular homes. 

What is a modular home? 

A modular home is constructed piece-by-piece in a climate-controlled facility. When it is fully constructed, a modular home is assembled on a poured foundation. 

From this point on there is little difference between a modular home and a site-built home. It will need all the conventional utility connections, and it will be outfitted with the same appliances and interior fittings. 

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Common misconceptions about modular homes 

You may have heard any of these misconceptions about modular homes, but these rumors can be put to rest. 

Modular homes are the same as mobile or manufactured homes 

There are several differences to note between mobile/manufactured homes and modular homes. 

The most distinguishing factor is the foundation for the two. While a modular home sits on a traditional foundation, mobile and manufactured homes are built on a permanently attached wheeled chassis. 

Modular homes are stationary, but manufactured homes are designed to travel over time. They are also limited in terms of size and floorplan design, and only meet HUD code so they can be placed anywhere in the country. 

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Modular homes decrease in value over time 

Unlike manufactured homes, modular homes are known to increase in value over time just like a site-built home will. 

This depends on many other factors, including age, condition, and location, but modular homes tend to follow market conditions. They do not decrease in value over time and become rapidly outdated, and as long as they are properly maintained they will at least hold the value. 

Modular homes are of inferior quality to site-built homes 

This idea may be true of older modular homes, but anything built recently is bound to have a quality that is on-par or even higher than that of a site-built home. 

Because modular homes are built in climate-controlled facilities they are not subject to structural damage from being built in the elements. Walls come out straight and corners meet seamlessly. 

Modular homes can stand up to weather just as well, if not better, than traditionally built homes. 

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Modular homes vs. site-built homes 

Modern modular homes are quite similar to site-built homes. They are built on the same type of foundation, and they offer many of the same benefits. The only major difference is how either type of home is built. 

Overall cost 

Modular homes are cheaper to build than traditionally built homes. This is due, in part, to the streamlined construction of these homes. The shorter time to build requires less overhead expenses, and most manufacturers buy materials in bulk and pass on the savings to the buyer. 

In certain cases, a modular home manufacturer is inclined to offer a discount to encourage the sale of certain models. This means that a buyer can snag a lower initial cost on a completely new build without compromising anything. 

Length of time to build 

Most modular homes can complete factory construction in 4 to 8 weeks. This is significantly shorter than the 8 months it takes to build a home traditionally. 

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Modular homes are not subject to weather or environmental delays, so you can expect the home to be completed on schedule more than you would with a site-built home. Because all the manufacturing occurs in one place, you do not lose time to improper scheduling or other human delays. 

Financial processes 

You have access to the same financial tools with a modular home as you do a site-built home. You can also benefit from financing and discounts offered by the manufacturer. 

Modular homes go through the same appraisal process, and you will pay taxes on a modular home as you would a traditionally built home. You can also secure homeowner’s insurance with the same ease, and go through the same rates and claim processes. 

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Benefits of modular homes 

Modular homes are preferred for their: 

  • Faster construction 
  • Lower expense 
  • Level of quality control 
  • Green construction 

There are many minor benefits, but these are major advantages and selling points. 

Faster construction 

One of the main benefits of modular homes is the speedy manufacturing time. While you cut months off the process, you do not lose out on the quality. 

If you are currently renting this can save you thousands of dollars by getting you into your own home much sooner. This is also a great solution for anyone with a set schedule that does not want to fall into the rental trap. 

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Less expensive 

Modular homes are cheaper than site-built homes of the same size and layout, but there is no compromise in quality or features. 

Because these homes tend to have a more solid build, you can benefit from lower energy costs overall. Most modular homes operate 15 percent more efficiently than site-built homes, translating to lower heating and cooling costs. 

Quality control 

Modular homes are built in climate-controlled facilities. These factories are secure enough that you will not have warped walls or other issues with the homes due to improper material storage or inclement weather when building. 

The manufacturing process for modular homes involves stringent inspections, both in the factory and again when the home is assembled on its foundation. Modular homes are also resilient enough to handle transportation. So you know they can hold up against quite a bit. 

Environmentally friendly 

The assembly-line process for manufacturing a modular home reduces the waste of excess materials, so the house is off to a green start before anyone moves in. 

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It is easier to adapt a modular home construction to include green energy options such as: 

  • Solar panels 
  • Energy batteries 
  • Low-energy lighting 

If you want to build an off-grid home, then a modular home would provide the perfect level of customization without compromising structure or size. 

Considerations with modular homes 

Modular homes are a unique type of construction, and there are many things to consider before deciding on this type of home. 

There is an undeserved negative stigma surrounding these homes that will need to be addressed, as well as external costs that add to construction costs. You should also pay attention to where you want to build your home. 

As long as none of these are issues for you, a modular home can provide a safe and comfortable living space for years to come. 

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Negative stigma surrounding modular homes 

The negative stigma surrounding modular homes is based on outdated information and building standards. However, this stigma can still affect you if you decide to sell your home. 

This will not decrease the value of the home, but you should take the time to find a realtor that has experience selling these types of homes and navigating conversations surrounding this information. 

External costs 

The cost of a modular home may seem too good to be true if you forget that you also need to pay for: 

  • Land 
  • Foundation 
  • Electrical wiring 
  • Plumbing 
  • Ductwork 

This is nothing out of the norm for new construction. Keeping these costs in mind is important when determining your budget. 

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Land restrictions 

While a modular home is built to the same standards as a site-built home, not every location will accommodate the assembly process. 

When selecting a plot of land make sure you check into local zoning ordinances or HOA covenants that may interfere with assembly. This should be done before making an offer. 

Frequently asked questions 

Are modular homes cheaper to build than site-built homes? 

In most cases, a modular home is cheaper to build than a site-built home of the same size and layout. This is due to the way that these homes are manufactured, but it does not indicate a decrease in quality. 

How do you know if an existing home is modular? 

Once a house is established it can be difficult to determine whether it is site-built or modular. One sure way to determine if an existing house is modular (if it was built after 1971) is to look for a tag called a Factory Built Unit Certification. This tag indicates that the home was built to meet universal building code standards imposed on modular homes. 

Is it more difficult to get a mortgage on a modular home? 

It is usually just as easy to get a mortgage for a modular home, but lenders that are unfamiliar with this type of home may need to do some research before authorizing the loan.