If you are planning to purchase a mobile home and you are worried about your poor credit history, you are in luck because there are mobile home loans for bad credit. These are actually sub-prime loans that are given by some lenders to people who have a history of a foreclosure, bankruptcy, loan defaults, or late payments.
But you MUST have sufficient equity of at least 40-60% in order for these lenders to even consider extending a mortgage to you.
The downside for this type of loan is the relatively much higher interest rates that the banks or private hard money lenders will charge because of the higher risk that they are undertaking.
There might only be a few lending institutions or private investors who are willing to offer this type of loan, especially during a state of economic crisis. Beware of white knights and too good to be true offers that may be a scam. There are a lot of foreclosure and mortgage scams happening all across America right now. Don’t become their next victim!
The common rule that lenders follow is to provide a mobile home loan only to people who have at least a credit score of 620. Thus, it would be a good idea to personally check on your credit score by buying a copy of your credit report from one of the Big Three credit bureaus, namely, Transunion, Equifax, and Experian.
This would also permit you to know whether there are any mistakes in your credit report. For example, you might notice an entry indicating that you were late for a particular payment when you are sure that you had been on time. You can provide a copy of your receipt to the credit bureau and ask for a correction. If you are able to increase your credit score through this move, it will result in substantial savings for you in the future.
The system used is that the lower your credit score is, the higher the interest rate will be charged. Sometimes the rate will not even be fixed but may increase year after year. Be on the lookout for these terms and make sure not to be late in your payments to be able to repair your credit score and to avoid large payments towards the end of the term.