Strategies to Obtain a Mobile Home Loan in Today’s Market
Life on the road can be quite exciting – there’s nothing quite like exploring the texture of America through its wandering highways and varied landscapes. With a traditional home, you may feel a bit constrained and anchored to your existing town.
In order to inject some adventure and mobility into their lives, a growing number of potential home owners are seeking out mobile home options. With a mobile home, you retain the ability to potentially transfer your home at some point in the future to a new location, and you can also use the money you save to truly enjoy your new settings. Read more
How to Qualify for a Manufactured Home Loan
Imagine yourself ten years from now: likely, you want to be in a comfortable position, enjoying life along with those whom you love. There are many options for finding a home to help you realize this goal in your new home. In addition to traditional home ownership options, you may want to consider manufactured home options.
When you traditionally think of manufactured homes, you may have images of constricted space, but, with advances in manufacturing technology, perhaps you should revisit those assumptions: new manufactured homes can be as spacious and comfortable as tradition homes at a lower cost and with mobility advantages.
As the Washington Post recently reported (see http://loudounextra.washingtonpost.com/news/2008/aug/26/reinventing-mobile-home-changing-market/), manufactured homes are on the cutting edge of the housing market, with improved energy efficiency and luxury features that would make many traditional home owners blush.
Before you rush out to purchase a manufactured home, there are a number of factors to take into consideration. Since you’ll need to finance your manufactured home purchase, it’s important to understand the entire qualification process.
Firstly, you’ll want to ensure that your property complies with the (get ready for a truly great government naming convention…) Federal National Manufactured Housing Construction and Safety Standards Act (whew.) In particular, you’ll want to first ensure the home was manufactured since 1980, as older homes may have difficulty qualifying for loans, and, moreover, they may have a truncated life span.
According to the Standards Act, administered by HUD, the house must be installed in sections to ground it to the site (you’ll need to file a 433A to verify this.) Further, you’ll need to meet the HUD construction codes, and pass a 3rd party site inspection for the property.
After the home has qualified for the HUD conditions, you should ensure that you have a lien-free ownership, or a cooperative agreement for ownership in a manufactured home park. Either way, you must be the owner of the property, whether alone or in collaboration, in order to qualify for the loan. Further, you must have property rights to the lot upon which the manufactured home is installed – 3rd party ownership will be considered a lien in many cases.
Not only must the home be grounded but it should serve as the primary residence within six months of signing the loan agreement, so if this is a 2nd home you may not qualify for standard manufactured home loans. Finally, if you are entering a cooperative ownership agreement with a park, then you should expect to have a long-term lease on the land for at least five years, so if mobility is your goal then you should seek land ownership.
In addition to the qualitative requirements, your credit score will be important in determining the type of loan you are able to qualify for – applicants with scores over 600 with fair best in today’s market, although lower scores may qualify with higher down payments and interest rates.
The average loan requires roughly a 10% down payment, although this is shifting in today’s environment. Still, choosing a manufactured home might be a smart choice to give you the flexibility to realize your home ownership goals in the current market.
What is a Mobile Home Loan?
A mortgage loan that is used to purchase a mobile home is called a mobile home loan (MHL). This type of mortgage is very similar to a regular home loan in many ways. But they do have some very important factors that differ as well. If the land the mobile home is on is being financed, what type of property it is, and how long the property has been around will all play a major role in getting approved for the mortgage.
Many times borrowers will choose to purchase a mobile home because they are much cheaper than a regular home. Although many of these people do not know that there may be additional fees that come along with financing the property. MHLs that are also financing the land in which they are located will typically have much different terms than one that is not financing the land. But as long as the property is being served as the borrowers primary residence either way there should be a tax reduction over time for the interest paid.
Typically a MHL will not be offered on a property that is more than thirty years of age, especially if the home is not located on a permanent foundation. More often than not lenders see a property this old as a great risk. This is because the normal lifetime for a mobile home is typically around thirty years. The lender will usually not finance a home that will more than likely not survive the entire length of the loan. Some lenders will even offer the borrower a fifteen year loan because of this reason.
A personal property loan is another choice an individual has for purchasing a mobile home. This type of mortgage is specialized for someone who will not be purchasing the land the property is on. This personal property loan is very common among people who own mobile homes because the home is usually placed on a rented lot, or some people may even move the home from one location to the next. Typically the length for this type of mortgage will differ from a traditional mortgage. Also many times the interest rate will be much higher than a traditional mortgage as well.
However, MHL’s usually require a smaller down payment than a traditional mortgage at about 5-10%. But if you have extra money to put down your lender will accept a down payment that’s higher than 5-10%. If you do not have enough cash to come up with at least five percent down your lender more than likely require the borrower to purchase mortgage insurance as well. If the borrower fails to pay the monthly payments and defaults on the loans, the mortgage insurance will pay the loan. The cost of a mobile home is usually lower than a regular home so the down payment will be much easier for an individual to pay.
-
LoanSafe in the News
LoanSafe TV