If you can’t find a house you want to buy you may be tempted to build your home yourself. In that case, you’ll need to choose between a stick-built house and a prefab home. Stick-built means your home is built the old-fashioned way, with a crew of workers on site for months raising the home and fitting it with plumbing and electricity. A prefab home, on the other hand, comes in pre-built parts.
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The term “prefab” is the abbreviation for prefabricated, which is all you need to know about prefab homes. These houses are manufactured in a factory setting and transferred immediately as full build. As you might expect, this type of home is extremely easy to make and move in comparison to a traditional home.
Prefab homes come in three main iterations: manufactured, kit and modular. Here’s a brief breakdown of each:
One of the benefits of prefab homes is that they tend to be highly energy efficient. Their tight seams and state-of-the-art windows keep heat in and reduce your energy bills in the process. As a bonus, modular homes’ tight construction gives them a reputation for being able to withstand natural disasters. If you ask many people “What is a prefab house?” they’ll assume it’s the same as a mobile home. Not true. Prefabricated (aka modular) homes go into a foundation like any other home. They can be high-quality, modern and elegant houses perfect for those who want a lower carbon footprint than the typical American suburban home has.
Fast construction is one of the big advantages of prefab homes. Because the parts of a prefab home come ready, all you have to do is assemble them and hook up the home to utilities. Hence the name “modular.” The prefab goes up much faster because it arrives partially constructed. That means fewer days with laborers on site and less vulnerability to weather delays and illnesses that can extend the construction process by days and weeks. Still, there’s more to consider than just the construction time. Site preparation, including obtaining permits, can be a lengthy process.
Building a prefab home is generally less expensive than building a comparable stick-built home. Nice, right? Part of the savings has to do with labor. It takes fewer laborers working over the course of fewer days to make a prefab move-in ready. That saves you money. Plus, as we mention, heating and cooling tend to be more affordable with prefab homes than with regular ones. If you’re open to buying an existing home, compare the costs of what’s available on the market with the cost of building a prefab. And remember that various levels of fittings and customization can raise or lower the cost of your prefab. Talk to the manufacturer about cost-cutting strategies available to you.
If you want to put up a prefab home you’ll need to own the land underneath it. If you don’t already own land you’ll need to buy it. You’ll also need to make sure that you’re able to put up a prefab home on that land, and that you can hook it up to electricity, water and sewer. And don’t forget soil testing on the land you’re planning to call home. Securing the land, inspections and permits can add up in terms of cost, time and trouble. Some companies that sell prefab homes will help you with this process, securing permits on your behalf and rolling their expenses into the cost of your modular home.
If you buy an existing home you can make a down payment of around 20% and pay off the rest of your mortgage over time. While financing and construction loans are available for many prefab homes, you’ll need to pay for the home’s construction before you move in. Your contract will include a schedule for paying in installments while your home is under construction. This pay-as-you-go feature of prefab homes means you need to be extra sure you can afford the prefab before you commit to buying it and putting it up. On the other hand, paying more up front saves you money in interest.
One of the disadvantages of prefabricated houses is that it can be tough to arrange for utilities and other site details. If your site is uneven you’ll need to have it leveled. Then you’ll need to lay the foundation and arrange for sewer strikes and electrical connection, not to mention connecting to city water or finding well water. If this all sounds a little too daunting, look for a prefab home that comes with the option to have the prefab home company take care of these details for you.
The cost of a prefab home will vary depending on how much you’re willing to do yourself and how much you outsource to others. Some ambitious home purchasers prefer to buy a prefab home as a kit and assemble it themselves, with the help of a few friends. Others are happy to spend the money to have the details of construction and permitting taken out of their hands. Wherever you fall on the spectrum, make sure you understand what you’re getting into before you go the prefab route.
If you’re looking for an affordable home that allows you to have the designs and even floor plans you want, consider a prefab home. These types of homes have come a long way, giving today’s home buyers many more options than before to buy a home of their dreams.
As you determine the type of home that’s right for you, prefabricated homes may be an option. A prefabricated, or prefab, home is built in a factory instead of on the land it will sit on. Prefab homes may be built entirely in the factory and delivered as an entire house or shipped in pieces and put together on-site.
Like stick-built homes, you can choose your home design, getting the floor plan and features you want in a new home. In addition, depending on the type of prefab housing you choose, you’ll have different options for foundation types.
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Prefab homes come in several designs and with several floor plans. The type you choose determines how the house is constructed and whether it’s transferred as a fully built home or in prefabricated parts.
The cost of prefab homes can vary widely depending on the home design, type of foundation and floor plans. On average, homebuyers pay $50,000 – $300,000 for a prefab home. This can be one of the cheapest ways to build a house because of the mass production of materials. This allows home builders to purchase home parts in bulk, paying much lower prices.
Other reasons prefabricated homes are so cheap include the following:
Like any home, you likely need financing when buying prefabricated homes. However, unlike stick homes, your options may be more limited. Here are a few financing options.
Prefab homes have pros and cons. When considering buying versus building a house, you should consider both sides.
Prefab homes are popular and affordable for home buyers. Here are some common questions people ask regarding them.
Prefab homes come in many types, including modular homes. These homes are built on an assembly line and delivered to the home site for assembly. They are usually cheaper than stick-built homes because some of the labor is done via assembly lines, decreasing labor costs.
You can buy prefabricated homes in many areas. Companies like Plant Prefab and even Amazon sell prefabricated homes.
On average, building a prefab house takes four to six months. This is much faster than it takes home builders to build a traditional house, mostly because some work is done in bulk, and there aren’t any weather concerns with work done indoors.
Prefabricated houses can be worth it if you’re looking for an affordable home that you have a say in the home design. The cost of prefab homes can be attractive, and today’s quality building methods make them highly sought after.
A prefab home can be a great option whether you’re on a budget, want an energy-efficient home, or want to streamline the home buying process.
Samantha Hawrylack is a full-time personal finance and real estate writer with five years of experience. She has a bachelor's degree in finance and an MBA from West Chester University. She writes for publications like BiggerPockets, Angi, Well Kept Wallet, Crediful, Clever Girl Finance, AllCards, InvestingAnswers and many more.