Guide to Owning a Modular Home in Shenandoah Valley

If you’re reading this, you’re probably interested in modular homes. Maybe you already know you want to build one or you’re still in the information-gathering stage. Wherever you are in the process, we cover it all in this exhaustive guide. From the benefits of owning a modular home, to what the process looks like, how to obtain financing, and more–F&M Mortgage’s friendly team of knowledgeable advisors is here to help. Our company has a division dedicated to modular construction financing and we have lots of local experience helping Shenandoah Valley residents build the modular homes. If you have questions as you read, give us a call!

Modular Home Benefits

Modular Homes offer endless new home designs and most factories will allow you to use your customized plans, which is why modular is popular way to build a home.

Many modular buildings can take just a day to assemble.

According to this Washington Post article, modular homes have many admirers, including top architects and celebrities like Robert Redford. Among everyday home buyers, time is one of the most attractive benefits of going modular. Because the modules are constructed in a factory, the entire process is shorter than traditional construction. Additionally, modular home factories aren’t subject to weather and labor-related delays. Here are some more modular home benefits:

  • Factory Construction: You could say a Factory is to Modular Homes as Site Built is to Stick Built Homes. It is just another way to build your home. Individual modules are built in a factory and assembled on site. This could save time and money. It also means the interior of your home is not exposed to the elements, reducing the risks of mold and mildew. Site Built homes are built almost entirely outside on your lot or piece of land.
  • Permanent Foundation: Similar to stick built homes you can build your modular home on a basement or crawl space.
  • Endless Design Possibilities: Choose from your builder’s catalog of home plans, add modifications to suit your needs, or ask about your customized home plans.
  • Appearance: Your modular home doesn’t have to have a “generic,” rectangular or box look. Instead, you can choose from traditional architecture styles and models like a Cape Cod, Ranch, Two-Story, Colonial, Victorian, and more.
  • Quality: Modular construction is subject to its own rules and building codes, which may often be stricter than site built construction. You can expect the highest quality and safety standards. Your modular home will also be inspected during the construction and after assembly to ensure compliance with local codes and ordinances. It will then be inspected by a state building inspector.
  • Energy Efficient: Many articles about modular homes tout the environmentally friendly construction process, which results in less waste than site built construction. That may not be your top priority, but you’ll appreciate the cost savings on utility bills that modular homes often deliver. Because they are built so solidly, they can be more energy efficient than older homes as well as new site-built construction.
  • Cost: Because the factory-built process is more streamlined, with labor and materials already supplied, you can usually avoid the surprise expenses that often accumulate with site-built construction.
  • Real Estate Value: Modular and stick-built homes are indistinguishable in appearance and both hold their appraisal value. Of course, fluctuations in your local real estate market can drive values up or down, but the modular nature of your home won’t be a factor.
  • Financing: Obtaining a loan for your modular home is usually as easy as a stick built home or purchase of an existing home. What’s different about modular and what construction lenders like is the limited risk of the build. Since most of the work is done in the factory and inspected, less can happen during the construction period and build of the home. It is important that a lender has history of providing construction loans, since there are a few more moving pieces than a home already build on lot or in a development. The difference in a new construction and what some say end loan or purchase loan, is that you may buy the land, design and build your home using a construction loan before it is really financed into a traditional mortgage loan. F&M Mortgage makes it easy with our unique modular programs. Find the perfect spot, land or piece of property, pick your design or home style and start your construction loan today. We work with your builder to make the entire process as smooth as possible.


An 1,800 square-foot modular home costs $240,000 on average

Of course, one of the biggest questions you’ll have when considering a modular home is how much it costs. According to HomeAdvisor, the national average is $240,000 for modular construction, with an overall range of $180,000-$360,000. You can enter your zip code and project details to get a more specific estimate. Harrisonburg-based Valley Homes offers free quotes when you know the style your of home, type of foundation, interest in adding a covered porch or deck, and garage. Here’s a complete list of factors that could contribute to the total cost of your modular home.

  • Land: As with new construction, you need to own the land or maybe you have land from family where your modular home will be assembled. If you don’t already have lot or piece of land, you’ll need to buy one. According to a Zillow search of land for sale in the Harrisonburg area, most lots are priced between $100,000-$200,000.
  • Site Improvements and Permits: Your builder and his contractors build a contract of costs associated with the to development the land for the home. Not only are they licensed to do so they are up to date on building requirements locally.
  • Home Plan: The size of your home and the number of upgrades to the interior and exterior will factor into the total cost.


Modular Home Construction Process

Our guide to Building a Home in the Shenandoah Valley contains information that is also relevant to the modular construction and building process. For example, the section on finding a plot of land is the same, as well as some of the interior work (such as drywall) that happens after your modular home is assembled on site.

Overall, it takes about three-four months from contract signing to move-in readiness. Watch the entire process unfold, from floor plan to finished home, in this video from Valley Custom Homes. Use our checklist below to plan for each step on your calendar:

  • Talk to and get approved by a construction loan officer.
  • Find and hire your builder.
  • Find a piece of land.
  • Select a home plan and customize the details.
  • Sign a contract with your builder.
  • Construction Loan Closes and site improvements begin.
  • Home is constructed in a factory.
  • Portions of the loan, called draws, are disbursed to pay for work completed.
  • Carriers with several modules will be delivered and set on your land, where they are assembled.
  • Interior work commences: drywall, electricity, plumbing and flooring.
  • Exterior finishes are finished or some are construction at site.
  • Any extras such as a garage or porch are constructed.
  • Final Draw is released to builder.
  • Your home is inspected and you are granted a certificate of occupancy.
  • Final Draw is released to the builder.
  • Time to move in!

Helpful Resources

Ready to start the process of finding a builder and designing your modular home? Here are some local resources.

Financing Options

F&M is your local partner in modular home financing. From purchasing a land lot to construction, and an eventual traditional mortgage, we can help you enjoy a smooth financing process from start to finish. Our Approved Builder Modular Construction Loan Program reduces your construction loan costs and qualified borrowers can take advantage of low down payment options. F&M is proud to be an approved lender for federally guaranteed loans such as FHA, VA, USDA, and VHDA. You may be able to use these home loans to finance part or all of your modular home costs. We also offer bridge loans for people who need to finance a new home purchase while waiting for their existing house to sell. Apply online or contact our lending team with any questions you have about modular home financing.

Shenandoah Valley's Modular Home Lender

How To Choose A Mortgage Lender: Community Banks vs Big Banks vs Brokers vs Digital Lenders

Who are the best mortgage lenders? This article will help you choose, but the answer ultimately depends on your particular circumstances and preferences. While tech savvy consumers may have no qualms about working with an online-only lender, other people prefer the kind of personalized service only a lender with physical locations can offer. Of course, here at F&M Bank, we have a lot to say about small bank vs big bank mortgages. We also break down the differences between online mortgage lenders vs banks, cover mortgage broker vs bank pros and cons, and provide the rest of the information you need to make an informed choice.

Digital Mortgage Lenders and Brokers: What are the Pros and Cons?

If you’ve done any mortgage research online, chances are you’ve seen ads for one or more “mortgage tech” companies, digital lenders and brokers that claim to provide the same services as their “bricks and mortar” forebears but with greater efficiency, speed, and customer service.

The biggest strength of these non-bank digital lenders is their technological innovation. Instead of faxing, mailing, or hand-delivering the required paperwork, you can complete the entire process online, perhaps even through a mobile app. Some borrowers may find this approach more convenient, and digital lenders also claim to offer faster processing times.

However, technology has its downsides, as Wells Fargo’s latest scandal demonstrates. If a “computer glitch” can lead to foreclosure, what else can go wrong? Also, you’ll want to read the fine print carefully and shop around before committing to an online mortgage lender. They aren’t always cheaper than traditional lenders – some digital loan companies have higher-than-average lending rates. And while they may bend over backward to provide superior customer service during the application process, you don’t know who will ultimately end up servicing your loan. It’s entirely possible to end up with a loan servicer who doesn’t have cutting-edge technology or great customer service. Then you’re stuck with that company until you sell your home or refinance the loan.

Additionally, a mortgage loan is a bigger investment and a more complicated process than applying for a personal loan online, for example. The “efficiency” promised by online lenders can translate to an impersonal approach with multiple points of contact and a lack of familiarity with local rules and regulations. You may find yourself, after it’s too late, wishing for a local office you could step into with a friendly loan officer to speak to in person.

Mortgage Brokers and Direct Lenders

If you’re already working with a buyer’s agent for your home search, you’ve probably been referred to the realtor’s “preferred lender.” This usually ends up being a non-bank, direct lending mortgage company. You can also seek out a private mortgage broker who, like an insurance broker, will shop around for you to find the best home loan for your situation. However, in exchange for outsourcing the comparisons you could do on your own, you’ll usually pay an extra fee or fees. If you’re wondering, should I use a mortgage broker or go direct to a bank or private lender, here are the pros and cons of brokers and non-bank lenders.

The main benefit of working with a private mortgage company or mortgage broker is their singular focus on home loans. Since mortgage loans are all they do, they may have additional expertise. And unlike their digital counterparts, private mortgage lending companies and brokers will usually offer a dedicated point-of-contact and physical locations you can visit for in-person help. Depending on the company, you may be able to find some of the same technological convenience that online lenders offer.

On the other hand, you still don’t know who will end up servicing your loan and what kind of customer service or technology they will have. You may also find higher rates and/or fees if you choose a private company or broker. Conflicts of interest can arise with brokers who work on commission from lenders or mortgage companies affiliated with the realtor, who may be more motivated to close the deal than to look out purely for your best interests. While some private mortgage companies have a regional focus, many are national chains that may lack the same local expertise as community bank lenders.


Most people are aware that national banks offer mortgage loans–in fact they might be the first thing you think of when you ask yourself, where do I go for a mortgage loan? That’s why Wells Fargo and Bank of America are the second and third largest mortgage lenders in the country. However, we’re all familiar with the dark side of being so big. Overall, the main benefit of working with a national bank on your mortgage loan is the infrastructure: 24/7 customer service support, online applications and other tech innovation, a potentially larger selection of loan programs and products. If you are a “cookie cutter” home buyer, meaning you have good credit and a standard employment history, you’re likely to have a smooth experience obtaining a mortgage from a megabank.

However, megabanks are a lot less flexible with people who are self-employed or whose credit isn’t perfect. Since they are already so big, they have little incentive to work with someone outside that cookie cutter shape they’re looking for. Megabanks often have higher fees as well, and you’ll find the same kind of impersonal service as with a digital lender: long hold times to speak to someone on the phone, fluctuating contact points, and possibly longer processing times. Even if you’re happy with their service, you’ll probably find that your loan is quickly sold or transferred to another lender, whose service you may or may not like. Finally, unlike with community banks and credit unions, megabanks’ profits flow back to Wall Street instead of your local economy.

Local Banks

Many community banks are willing to consider character, family history, and discretionary spending in making loans.

Last but not least we have local banks, which are often overlooked but actually an excellent choice for your mortgage lender. Borrowers may worry that their community bank can’t provide the same 24/7 customer service or technology as national brands, but those assumptions aren’t always true. Many local banks offer online mortgage applications, for example, and extended hours for customer support by phone. You may also be able to contact your loan officer quickly via email or their personal cell phone number. This is the level of personalized service that community banks typically offer.

Instead of being bounced around from person to person, you can depend on a consistent point of contact who knows you and will work with you through the entire process. This makes applying for a mortgage less stressful–after all, you are making a purchase that is likely the biggest of your life, so a friendly voice and familiar face can go a long way in easing your nerves. Local banks also typically provide a faster response time due to their local decision-making. They also frequently service the loan after closing, so you won’t experience the unpleasant situation of having your mortgage sold or transferred to a lender you didn’t choose and don’t know.

Local banks can also compete with megabanks in terms of selection. In addition to specialized or local homebuying programs they may offer, community banks give you access to the same set of major loan programs including FHA, VA, etc. They are also much more willing to work with, and offer flexibility to, “nontraditional” borrowers such as the self-employed and those with an imperfect credit history.

Discover The Local Bank Difference

If you’re considering buying a home in Harrisonburg, Staunton, or elsewhere in the Shenandoah Valley, talk with a trusted local lender who has been helping people buy homes since 1908. Learn more about the different types of mortgage loans F&M offers and start your application online or give us a call to start the process with one of our friendly loan officers.

Financing Homes in the Valley Since 1908


What Realtors In The Shenandoah Valley Need To Know About Title Insurance

Buying a home is one of the biggest decisions a person or couple can make. As a realtor, clients trust you to guide them through this important process. While potential buyers focus on the appearance of the kitchen, or whether there are enough bedrooms for the kids they hope to have, you work behind the scenes to crunch numbers and make sure the necessary paperwork is completed on time. Your clients may not care to read every word, but it’s your responsibility to make sure they understand all aspects of the closing paperwork, including title insurance. Here at F&M, we care about local communities and we know that the state of the housing market is an important part of a town’s overall vibrancy. We created this guide to title insurance to support realtors and home buyers in the Shenandoah Valley. We hope it helps you make an informed decision about title insurance policies.

What exactly is title insurance?

Most homebuyers, even repeat ones, have heard of title insurance but don’t really know what it is. They may think it’s just another requirement that adds to their closing costs without providing any tangible benefits. This view is common but decidedly wrong. The truth is, homeowners are lucky if their title insurance never comes in handy, but they could get into a lot of trouble without it. Simply put, title insurance guarantees that the seller is legally within their rights to sell the home to the buyer. Therefore, title insurance policies protect mortgage lenders and home buyers from ending up with a defective title.

3 Types of Potential Title Issues

If you’re wondering what a defective title looks like, we’re not referring to water damage or any other kind of printing/paper damage. Title issues are past events that affect ownership of the house and are not as readily apparent to buyers as, say, outdated bathroom tile.

  • Lien: a public record that money–as in unpaid taxes, a mortgage loan, or contractors’ fees–is owed on the house. If these creditors are not paid at the time of the closing, the buyer will be responsible for any remaining liens.
  • Encumbrance: A right to the property that decreases its value. A lien could also be classified as encumbrance, as well as local restrictions and easements.
  • Defect: Any other type of error or complication, such as a person besides the seller who has a legal claim to the property.

Distinguishing Title Insurance From Other Insurance Policies

Sometimes the most helpful approach to understanding something is to distinguish it from other, more familiar items. There are three important differences between title insurance and other insurance policies:

  • Payment schedule: With automobile policies and other types of insurance, you make regular premium payments as long as you’re insured. But with title insurance, you only pay once (at closing) and are protected for as long as you or your heirs own the property.
  • Responsibilities of the insurance company: When you sign up for car, health, or life insurance, the company asks you for basic information and provides a quote on a specific policy. That is the extent of your interaction with the insurance company, until you need to use the policy. With title insurance, the company fulfills most of their responsibilities upfront. They don’t just give you a piece of paper describing the benefits you’re entitled to, but take an active role in your closing process, from conducting a research-intensive title search to serving as an escrow agent and preparing essential paperwork.
  • Past vs future events: Most of the time, people buy insurance policies to protect themselves from things that haven’t happened yet, but could occur at any time, such as car accidents and major illnesses. Title insurance protects you against what has already happened, such as a contractor putting a lien on the property for unpaid work. As part of your title insurance policy, you’ll receive a report of any title issues before closing, and your policy will protect your equity in the home against future legal and other costs stemming from title issues.

What are the two types of title insurance?

Types of Title Insurance

  • Title insurance for lenders: Covers mortgage lenders’ legal fees if the title fails or if the priority of their lien is different than expected. Usually a buyer must pay for lender’s title insurance in order to get a mortgage.
  • Title insurance for owners: Covers legal fees and costs of clearing a defective title if the owner’s legal right to the house is challenged.

Because owner’s title insurance is optional, some people may ask why they should pay for it. It’s tempting to cut a little bit off the total closing costs, but forgoing title insurance could end up being a major headache, both financially and otherwise.

Even new construction should be covered by an owner’s title insurance policy.

If your client is buying a new home (see our home building guide for Shenandoah Valley) , they may especially question the value of title insurance. However, while the house is new, the land could be subject to liens. And even a new home could have a lien on it from an unpaid subcontractor. The bottom line is that owner’s title insurance is an essential protection for every home purchase.

How much does title insurance cost and who pays for it?

The price of a lender’s policy is based on the amount of the loan. Owner’s policies are calculated from the purchase price of the house. There are different policy levels to choose from, so read the coverage details carefully to make the best choice. Some companies may offer a discount if both policies are purchased at the same time. In Virginia, the home buyer typically pays for both title insurance policies. It may be possible to include a credit from the seller in your contract.

Buyers have the right to choose their own title insurance provider

Your realtor or mortgage lender will probably refer you to the title insurance company they usually work with. That doesn’t mean you have to work with them, however. You can (and should) shop around for the best quote and policy, just as you would with other purchases. Virginia’s Bureau of Insurance provides a database of licensed insurance companies.

How Title Insurance Works

How Title Insurance Works

Once you’ve chosen a title company, they will provide a title commitment (the details of the policy that will go into effect upon the sale of the house) and conduct a title search. The buyer receives a summary of the title search results before closing. If any title issues are discovered that cannot be resolved, or the buyer doesn’t want to accept a certain type of easement, the purchase of the home may be cancelled. Once the title is cleared, the insurance company’s escrow agent will prep and review closing paperwork. After closing, the title insurance policies for the lender and buyer become active. As we’ve mentioned, title insurance is paid for with a one-time premium and provides coverage for the entire time the home is owned by the same buyer or their heirs. If you refinance your mortgage, you may need to purchase a new policy.

Benefits of Local Title Companies vs. National Names

Just as banking with a locally-owned financial institution offers unique benefits that cannot be replicated by bigger banks, choosing a local title company can work to your advantage in several ways.

  • Trustworthiness: Local title companies cannot survive without the continuing trust of the community they serve. If you see that a local business has been operating for many years, you can usually count on their trustworthiness. Chances are, they can refer you to previous clients who live in your town and can provide a positive review.
  • Friendly Service: Across industries, small and locally-owned businesses often deliver the type of friendly and personalized service that is hard to come by with national chains.
  • Local Expertise: A locally-owned title company only works in your state and town. This gives them local expertise and insight into state and local laws, community traditions, and so forth.

Regardless of the title company you choose, you want to ensure they have your best interests at heart. Companies that depend on realtor referrals may be more motivated to achieve a quick and problem-free closing than to provide a comprehensive search and disclosure to the buyer. This is another reason to choose your own company and to find a local business with more loyalty to their clients and community than to a particular realtor or mortgage lender.

Talk To A Local Title Expert Today

Serving Shenandoah Valley Home Buyers Since 1985

VSTitle, a locally owned title agency, has served home buyers in Harrisonburg, Staunton, and the entire Shenandoah Valley since 1985. Visit their website to learn more about the title insurance services they offer and get a quote for your home purchase from a local title expert. When you partner with community-minded businesses for your mortgage, title insurance, and other home buying needs, you enjoy both excellent customer service and competitive products.

A Guide To Building Your Home In The Shenandoah Valley

Named after the river that traces its border, the Shenandoah Valley region of Virginia is also nestled between two mountain ranges: the Blue Ridge and Appalachians. Locals enjoy the simple pleasures and outdoor activities available in Shenandoah National Park. Overall, the Valley is a large area with many different kinds of people and places to live. Its counties include part of Augusta and Rockingham, as well as all of Page, Warren, Clarke, Rappahannock, Madison, Staunton, Waynesboro, and Harrisonburg.

At F&M Bank, we think the Shenandoah Valley is a wonderful place to live. If you’re looking to build a home here, we can help you with a construction loan. We also want to help you learn what to expect throughout the process. This guide to building your home in the Shenandoah Valley will explain how to select a land lot, budget for construction, and obtain a home construction loan.

What are the benefits of building in the Shenandoah Valley?

The Shenandoah Valley, which encompasses the area between West Virginia’s Eastern Panhandle and Western Virginia, is a versatile region. It’s a great place to attend college, raise a family, start a business, and retire. Whatever stage of life you find yourself in, we guarantee you’ll find it pleasant and fun to live here.

Shenandoah Valley Map

When it comes to building a home in the Valley, you can choose between a rural, suburban, or urban location. Perhaps you’re ready to build your dream house on the farmland your family has owned for generations. Or you may wish to put your own unique touch on a home in a new suburban housing community. Still other homebuilders may plan to construct townhomes in the vibrant downtown neighborhoods of cities like Staunton or Harrisonburg.

Whichever location you choose, you’re sure to enjoy the beautiful scenery and thriving arts and culinary scene that longtime Valley residents cherish. They also cherish the lower cost of living here. Compared to nearby Washington D.C. and other expensive areas of the country, the Shenandoah Valley offers graceful living at a price point that is affordable for families and retirees. For example, the Home Construction website ProMatcher estimates the cost of building a home in Harrisonburg (the Valley’s largest city and metro area) to be $119.32 per square foot. That works out to $238,640 for a 2,000 square foot house, which is lower than the national average of $288,642 (we’ll talk more about that below). Your home plan may be smaller or larger than 2,000 square feet, but either way you can rest assured that you’ll spend less on building a home here than in other parts of the state and country.

Finding a Lot in the Shenandoah Valley

Now that you’re ready to embark on the exciting journey of home building, you need to find the right parcel of land to build on. Here are the most important factors to consider as you look for a good lot that meets your needs without any unwelcome surprises:

  • Experienced real estate agent: Buying land comes with different concerns than buying a house. Make sure you find a real estate agent with expertise in land sales.
  • Average home values: Both for the purposes of obtaining a construction loan and protecting your property’s resale value, you need to understand real estate prices in the neighborhood or community you’ve chosen. Avoid choosing a location where the cost of the lot and your planned home will exceed the average home value.
  • Current and future zoning laws: Before you buy, research local zoning laws, building codes, and ordinances. If the land is zoned for retail, agriculture, or anything nonresidential, you won’t be able to put a home there. It’s also worth investigating the town’s future development plans so you don’t end up with a living room view of a busy strip mall five years later. Visit Shenandoah County’s Building Inspection and Code Enforcement page, or Harrisonburg’s City Code page to learn more. Your realtor should also be able to help you explore local zoning laws.
  • Setbacks and view ordinances: Check to see what they are (in the case of setbacks) or if they come with the land (for view ordinances). Both of these factors can restrict the size and height of your home, potentially disqualifying the lot.
  • Environmental tests and natural hazard disclosure: Ask for the latter, but also do your own tests, such as a soil test, to ensure the land isn’t contaminated with asbestos or other toxins.
  • Landscape concerns: If the lot is near a large hill or mountain, check to see if your home will be at risk of a landslide. Also, if you’re going to build near water, you’ll want to know the history of the land (was it previously a swamp) as well as its current flood risks.
  • Professional surveyor: Hire one to determine the boundaries between your property and neighbors’.
  • Easements and road access: Does a neighbor have any rights to your land? Do you have access to the nearest road? Who maintains that road and will you have to contribute to the cost? These important questions could make or break your lot purchase.
  • Utilities: Find out if the lot consists of “raw” land (meaning no utilities have been added) or land with some “improvements,” such as telephone poles or a sewer system. If you’re buying land in the country, chances are high that you’ll need to connect all the utilities yourself. In that case, make sure everything you want and need can be hooked up to your future house. On the other hand, home builders in the city or a suburban community may have easier access to water, electricity, telephone/cable, heat, and sewer system.
  • Mineral and Timber Rights: These considerations may be the last thing on your mind right now, but you’ll be glad you checked in case coal is discovered on your property later on. The same thing goes for trees.
  • Appraisal: Make sure you get one before you sign on the dotted line. Land purchases are less common than home sales, so it can be harder to find comparisons. If you use a construction or other bank loan to buy the land, the bank will do an appraisal. If you’re paying in cash, hire an independent appraiser to ensure the price is fair.

Cost and Budgeting for Construction

Avg Cost Per Square Foot to Build in Harrisonburg

After you find and buy the perfect lot for your house, it’s time to create your construction budget. The 2018 national average cost of building a home is $288,642, according to HomeAdvisor, which also reports that typical home building costs range from $151,839 – $425,445. On the high end, people can spend as much as $700,000. We’ve already mentioned the average cost per square foot in Harrisonburg of $119.32, so keep these numbers in mind as you decide on a size and layout for your home. Also, leave room for cost overruns, which are all but inevitable in a construction or renovation project. Here are some other essential and unexpected costs to keep in mind as you budget:

  • Floor Plan: You can find one on your own from a book or magazine, or choose from a builder’s selection. Just keep in mind that the builder you choose may have to alter an outside plan to fit your lot. If you use a different builder than the one you obtain a floor plan or revision from, you may have to pay a fee for the plan.
    • Architectural Style: The simpler and more uniform your house plan, the cheaper the cost. Overall, a two-story house with a rectangular or square shape is the most affordable design.
    • Design Features: Similarly, any flourishes you want to add, such as vaulted ceilings or curved staircases, will increase the overall price tag.
  • Construction Cost Estimate: Your builder should be able to provide an estimate of basic construction costs after you choose a layout. Don’t be timid about comparing estimates from several builders before you make a final selection.
    • Quality of Materials: Your choices here will also contribute to how low or high the final construction cost is. For example, what brand of appliances do you want to install in the kitchen? What kind of flooring do you have in mind? You will have many details to select, so remain conscious of pricing as you decide.
  • Site Preparation: Are there a lot of trees to clear or rocks to move? The condition of the lot prior to building will determine your site preparation expenses.
  • Permit Fees: Depends on local building codes and zoning laws.
  • Timing: The season you choose to start construction in, as well as the strength or weakness of the local economy, will affect labor costs.
  • Detailed Contract: Make sure all small and ancillary costs, such as the price of a driveway or liability insurance, are specified in the builder’s contract. Also take a double look at the builder’s allowances, which provide for certain to-be-determined costs like kitchen countertops. Depending on your tastes, the allowances may not be realistic, which will lead to cost overruns.

Using A Construction Loan To Build A Home

You may feel a bit overwhelmed at this point, but the most important step is yet to come. Unless you plan to pay for your custom home in cash, you’ll need to obtain a home construction loan. We recommend working with a local bank like F&M. As one of the Shenandoah Valley’s oldest community banks, we have a nuanced understanding of the local real estate market. We also deliver friendly and personalized service to help you reach your financial goals.

Construction Loan Process

Once you’ve chosen a lender for your construction loan, the application and closing process will involve an appraisal of your floor plan and future home, a credit check, and the purchasing of relevant insurance policies (see our guide to title insurance for the Shenandoah Valley). You can expect to contribute a down payment that may be higher than what would typically be required for a home mortgage. Once your construction loan is approved, your builder will receive the money in sequences. When your home is finished you’ll need to convert your construction loan into a regular home mortgage.

Planning For Each Stage of the Construction Process

You’ve finally completed the paperwork and construction is set to start. You can’t wait to see and move into the home you’ve spent so much time designing, but the building process won’t happen overnight. Here are the eight stages you can expect with home construction:

  1. Excavation: The builder clears the site, digs the basement if you’re getting one, and does any other necessary prep work.
  2. Foundation: Most new homes these days are built with slab foundations. However, you may need or desire a basement or other type of foundation.
  3. Framing: Now you’ll see your home take shape. As the subfloor, walls, and roof structure appear, you may decide to make alterations to the layout.
  4. Mechanics: Your home will be bustling with different contractors during this stage as heating, air conditioning, plumbing and electric are installed.
  5. Drywall: Your house acquires separate rooms and exterior materials are added.
  6. Finishings: Things get fun as your design choices–from cabinets to flooring–are added.
  7. Hardware: This is also an aesthetically pleasing stage as faucets, shower heads, and other details are placed in your home.
  8. Final Touches and Inspections: Your house is almost move-in ready, but first the builder will clean and inspect the finished home to make sure it’s safe and meets all of the specifications in the contract.

Ready to get started? F&M Bank is here for you.

When you’re ready to build, we’re here to help you obtain financing and understand the construction process. We can even recommend local realtors, builders, and other professionals. That’s the beauty of banking with a local institution, where all the employees are also your neighbors. Welcome to our community–we look forward to meeting all of your banking needs. Contact us today to learn more or visit your nearest F&M location.

How Tax Reform Will Impact The Shenandoah Valley Housing Market

In this article, we cover some of the provisions of the new tax legislation according to their potentially positive or negative impacts on the housing market, followed by a discussion of what would happen to real estate in a high-inflation environment, and why that’s important.

Taxes are one of the most influential factors on the price of a house. Local property tax rates,  the portion of a buyer’s paycheck that goes to Uncle Sam, and various other taxes influence the “amount of house” one can afford. Since most people with mortgages have their loan payment, insurance, and property taxes bundled together, high property taxes can greatly diminish the size of the mortgage loan a buyer can qualify for.

For example, a $175,000 mortgage (30 years, 4 percent interest) carries a payment of about $835 before insurance and taxes, with every $20,958 of the loan equivalent to $100/month of payments. However, if the property tax is $6,000 a year, or $500 a month, the buyer would be paying an amount of tax that, if it didn’t exist, could qualify them for almost an additional $105,000 of principal. Of course, all houses have some level of property tax. The good news for the Shenandoah Valley real estate market is that property taxes are generally lower than in other states, particularly higher-tax states on the coasts.

Now that Congress has passed the Tax Cuts & Jobs Act of 2017, how will the housing market be affected? The bill’s various repercussions include a permanent reduction in corporate tax rates, temporary reductions in individual tax rates, and the elimination of certain deductions in exchange for an increase in the standard deduction. In this article we cover some of the provisions of the new tax legislation according to their potentially positive or negative impacts on the housing market, followed by a discussion of what would happen to real estate in a high-inflation environment, and why that’s important.

Positive Effects

  • Estate tax exclusion: The estate exclusion doubles to $11.2 million. While this could have a beneficial impact on home prices in the top percentile, it’s unlikely to affect the rest of the market.
  • Economic Optimism: Data shows Americans are feeling more optimistic about the economy now than they have in years. This could be good for real estate, as positive feelings about the future tend to inspire big decisions like buying or selling a home.

Negative Effects

  • Standard deduction: The revision of the standard deduction (increased to $12,000 for single filers and $24,000 for families) is expected to mildly dampen demand for home buying because of the decreased incentive to itemize deductions such as mortgage interest and property tax–two reasons a person considers purchasing a home versus renting.
  • Caps on mortgage interest /property tax deductions: The new tax law caps state income and property taxes at $10,000. The maximum amount of a mortgage that can have interest written off on it is $750,000. Implementation of the mortgage interest/property tax write-off caps is expected to disproportionately influence the housing markets in states with both high property taxes and home prices. These would generally be states with large urban areas and more affluent populations. Since median home prices in the Shenandoah Valley are well below the maximum, and property taxes are low, our local real estate markets shouldn’t be hurt by these caps.
  • The end of the “moving expenses” deduction: Now only members of the military can claim moving expenses as a deduction on their taxes. One would think that the effect of this would be minimal, but it’s potentially negative in terms of house prices and value.

Could The New Tax Policy Over-Stimulate The Economy?

Could the new tax policy over-stimulate the economy?

The Tax Cuts & Jobs Act, which is projected to add more than one trillion to the deficit over the next 10 years, is a stimulus of sorts—it uses deficit spending to provide tax cuts that primarily benefit corporations and those on the upper rungs of the income ladder. Currently, with unemployment at 4.1% as of January 2018 and record highs in the stock market (along with very high house prices)—not to mention an 0.5% inflation reading in the Consumer Price Index for January—there is a possibility that the tax policy could lead to several rate hikes.

The current stated intention of the Federal Reserve is to raise interest rates three times this year. The threat of inflation, then, is real, and mortgage rates could spike—the current 4% to 4.125% that’s typical of a 30-year fixed loan is historically low to begin with. Home prices would likely decline by a good amount if inflation was accompanied by a lack of concurrent elevations in wages. If annual inflation as measured by the CPI is 6%, but wages only go up an average of 3%, purchasing power would be reduced at the same time that interest rate hikes are causing home prices to go up.

To put this into perspective, let’s return to our $175,000 mortgage, 30-year fixed at 4%, with a payment of about $835. This payment goes up to around $939 if the interest rate is 5%, and up to about $1044 if it goes up to 6%. With stagnant wages (what was called “stagflation” in the 1970s), this would reduce the number of potential buyers of houses at given prices, theoretically causing prices to drop. Alan Greenspan, the former chair of the Federal Reserve, has posed the argument in favor of the case for potential stagflation here.

The Good News About The Shenandoah Valley Real Estate Market

Negative impacts aside, there’s plenty of bright side to look on from a financial perspective of home shopping in the Shenandoah Valley. Median home prices and the number of homes purchased in major markets such as Harrisonburg have increased over the past few years as the area becomes more attractive to different demographics such as families and retirees. Furthermore, most of the tax bill’s housing-related propositions are for tax bills that are far greater than the typical tab for a single-family property in the Shenandoah Valley’s most popular towns, and a $750,000 mortgage cap for interest write-offs is far above the median home price of a place such as Harrisonburg, even with the price increases (which have placed Harrisonburg’s median at about $200,000).

Overall, home buyers are just as likely to weigh lifestyle preferences such as proximity to work and family as abstract economic conditions. Luckily, The Shenandoah Valley is a great place to buy a home for both financial and emotional reasons. Strong schools, a good job base, university presence, and outdoor recreational options are all qualities of our region that most home buyers have on their wish list.


With interest rates still relatively low, now is as good a time as ever to think about buying your first or next home. Contact F&M Bank’s mortgage team for expert advice and help with getting the right loan to buy the perfect home for you and your family.

We do not provide tax advice. Please contact your tax advisor.