Many homebuyers opt for a mobile/manufactured home over site built homes for a variety of reason. The prices of manufactured homes, which are built in a factory and then moved to and set up on a site, tend to be considerably lower. Some people like the freedom of living on a piece of land they own or rent without the restrictions that city subdivisions have. With a mobile home you can choose to have it set up on a permanent foundation or you can forego the foundation so that your home can be what it’s name implies: mobile.
Here is some important information to have when looking to buy and finance a mobile/manufactured home.
Types of Financing Available
Loans for mobile and manufactured housing are either mortgage loans or personal property loans.
1. Mortgage Loans – If you do decide to put your home on a foundation, then you can get a mortgage that covers the land and the house. Or the loan can for the land only or the house only. A loan for the home and the land will include the cost of the mobile home and the land, as well as the work required to prepare the lot and to set up the house.
The appraised value must at least be equal to the price you are paying for the home. You can go to any bank, lender, or mortgage company that handles typical mortgages and, as with any mortgage, you will have to pay the usual fees and closing costs. The interest rates are usually comparable to those of site built homes.
There are several different types of bad credit mortgage home loans for mobile homes. Some of them are:
· Federal programs like FHA offer a maximum loan of $175,000 for a home placed on land that you own. The VA ensures that private lenders give mobile home equity loans to veterans for up to 95% of the cost.
· There are state housing agencies that will give first time buyers mobile home refinance loans at rates lower than most private lenders.
· Conventional loans can be attained from the usual sources like banks and mortgage companies. They offer fixed rate mobile home loans for bad credit, ARMS, buy downs, and any other type of loan that is available for a site built home.
You can also get low down payment loans and bad credit mobile home loans. Bad credit loans normally carry very high interest rates.
2. Personal Property Loans – This type of loan applies when you plan to place your home on a rented lot. The retailers who sell mobile and manufactured homes generally offer these types of loans.
The term of these mobile home land loans are anywhere from 10 to 30 years and require 10% of the purchase price as a down payment. The interest rates are typically 2 to 5 percent higher than a mortgage. The plus sides are that you can qualify with a higher debt ratio on your credit report and the loan can be used to cover improvements to the home like garages or sidewalks.
How to Qualify for Mobile Home Mortgages
There are certain conditions that must be met in order to qualify for a mortgage on your manufactured or mobile house. A home built prior to 1976 probably will not qualify for a mortgage.
Some of the requirements for qualification are:
1. HUD Code – Your new home must have been built in a protected building in one to three sections. Once it is built, it must be transported on a frame to the home site and professionally installed, with the wheels and axels removed and the home fixed to the ground. There are certain HUD construction restrictions that must have been followed that the home must meet and certain standards for heating and air conditioning. The home must pass inspections to ensure that it meets these standards and all others that are required.
2. Ownership Rights – You must have complete ownership rights to the home and property. An exception is if you are placing the home in a mobile home park that is a cooperative association.
3. Applicants for the loan must have a credit score of 620 or higher and a 5-10% down payment is normally required.
If the loan for your manufactured home is a mortgage loan or a personal property loan, the interest is always tax deductible, along with the property taxes you pay.