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.
My name is Maurice “Moe” Bedard. I am the founder of America’s #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.