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Attaining financing for any home, let alone one built with shipping containers, can be a challenging task; since shipping container homes are considered “nontraditional housing” they usually carry an extra level of scrutiny when being reviewed by a mortgage underwriter. A purchaser or builder can have a great credit score, but the issue doesn’t sit with the credit worthiness of the buyer, but the marketability of the home should the bank be forced into a position of foreclosure. If comparable housing can’t be found in the area an underwriter may not want to sign off on the structure due to an unknown value of the property. With this in mind, what options are left available to anyone wanting to build a container home? Unfortunately, not many. The home can be built on credit cards, self-funded over time, or a second mortgage can be taken out to help with the cost of the home.
The least recommended way to finance anything, from a single tank of gas for your card to building a second home, is to put it on credit cards. If you’re able to pick up air miles or some other benefit and pay the debt off immediately it’s acceptable, but if the balance carries over from month to month the debt can be crippling. It may be the easiest way, but it’s never advised to try to finance building a shipping container home on credit cards.
The slowest, but probably the best way, to finance building a shipping container home, is to self-fund the project. This just means that over time, as money is available, purchases are made and work is completed. The end result is a container home built with no debt or bank loans to deal with.
If you currently have a home and have equity in the property, you may be able to take out a second mortgage, or home equity loan, and finance the construction of a shipping container home. It’s not a conventional way to do it, but it’s more efficient than trying to finance the project on credit cards or other high interest rate loans.
While it’s not the easiest way to go about it, obtaining a residential mortgage is the most cost effective way to go about financing a shipping container home. However, there are some hurdles to overcome along the way. A large national bank that plans to sell the loan into the secondary market may not be interested in the property, but a local or regional bank that will keep the loan for its duration may be more willing to understand and accept the property.
Regardless of how you choose to finance the property, either through bank or credit card debt, or self-funded resources, building a shipping container home is a unique and creative way to build a first or second home and will be very rewarding. If you have any experiences that you’d like to share feel free to post your comments below, or email our office directly and let us know if we can share them anonymously. As always, any questions are welcome.