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.