Mobile Home Purchase Loan

Until recently, lenders considered getting a mobile home purchase loan risky. Property values on mobile houses generally drop instead of rise like traditional property. However, financing for these manufactured houses are increasing in popularity. With lower interest rates, financial institutions have found that the market for mobile home purchase loans has not only risen considerably, but the quality of manufactured homes has improved as well, making them worthy enough to add to their investment portfolios. The market for these loans has now grown into a $14 billion industry.

Mobile homes often create images of worn-down trailers in low-income neighborhood "trailer" parks, but this is not always the case. But by definition, mobile homes are simply residences that are creates in one, two or three parts in a protected building and transported on a frame to a location or lot where the parts will be reassembled. This range includes singe, double and triple wide "trailers" as well as manufactured homes that look like they were custom-built. Nearly one in every three homes bought in the United States are considered manufactured homes. Because of their lower costs, these residences attract more than lower income families and individuals with poor credit scores. They are a popular consideration for first time homebuyers in middle-income families as well.

However, because these houses were built to be transported instead of stationary, they are not eligible for traditional home financing. In the past, by its very nature, a mobile home purchase loan often falls into the category of property loans instead of home loans. Personal property loans require a 10% down payment and can be financed over 10 to 15 years with interest rates, although tax-deductible, that are about 2-3% higher than traditional mortgages. Today, larger lenders have entered the manufactured home financing market, the industry is changing. Many institutions now only require a 5% down payment and will finance up to 20 or 30 years, depending on the borrower's credit score and how mobile the residence actually is. Increase mobility in a house also may subject it to annual vehicle license fees, but the less mobile, the great opportunities for financing. "I will liken him unto a wise man who built his house upon a rock, and the rains descended and the floods came and the winds blew and beat upon that house; and it fell not: for it was founded upon a rock" (Matthew 7:24-25).

Manufactured homes are usually purchased from a retailer who can provide the buyer with lenders who specify in mobile home purchase loans. Personal property loans still remain the most common form of loans for manufactured homes, especially houses that will be placed on a rental lot. The Federal Housing Administration (FHA) or the US Department of Housing and Urban Development (HUD) has approved lenders through their Title 1 program to help manufactured home buyers get the financing they need. This program is not a government loan program. Interest rates are higher, but fixed based on the prevailing market rate. These lenders will help buyers purchase a piece of land (up to $16,200), finance a manufactured house (up to $48,600) or a combination of both (up to $64,800). Financing limits can be increased for buyers who live in more expensive areas. All houses purchased through the Title 1 program must comply with strict FHA safety standards and serve as the primary residence of the purchaser. Although Title 1 loans cannot be used to purchase items like furniture, they can be used for appliances and other major equipment.

In most states, a buyer can secure a mobile home purchase loan in the form of an actual mortgage. These mortgages are only applicable to manufactured houses that will be affixed to a permanent foundation on the property, which can be purchased through the same loan. These mortgages cover the cost of the home as well as any repairs to the lot. Local or private banks, credit unions, and more traditional mortgage companies may handle manufactured house financing of this type. They often offer refinancing from 15 to 30 years with many options from fixed interest rates to an adjustable rate mortgage (ARM) to various hybrid programs. Some states, offer other incentive programs to first-time buyers with lower interest rates than traditional lenders.

Mobile home purchase loans can be secured or unsecured. Secured financing requires a collateral to borrow against. Unless the buyer owns the land he wishes to place the manufactured house, he has no equity to borrow against. Unsecured loans, which require no collateral can be approved must faster. Finances are usually released within days instead of weeks or months. Unfortunately, unlike traditional house mortgages, the nature of these loans leaves little room for rate negotiations. Buyers often have to take the interest rates provided. The only bargaining chip that will leverage a borrower's power is their credit rating. Borrowers with a credit score of 620 or higher can usually negotiate a good interest rate on a mobile home purchase loan. Poorer scores will increase interest rates, but some lenders will offer financing that is not driven by credit scores as long as the borrow has a moderate score of 550 or better. Online brokers can assist buyers by searching for the best deals available often saving thousands of dollars as well as the time spent researching all the various lenders.

There are many other mobile home purchase loan options available from federal programs that offer little cash down and lower interest rates to shorter term loans that cover construction and home improvement for manufactured homes and lots. No matter what type of financing chosen, always study the warranty and make sure to have all the necessary paperwork in order to obtain the tax benefits on the interest payments. As manufactured homes continue to increase in quality, value is starting to rise and they are becoming more and more a solid investment, taken seriously by many financial institutions.



Ten years and counting | Dev release: 0.2.153.1 | What would you ask Senators McCain and Obama? | Announcing the Android 1.0 SDK, release 1 | Opening the door to geospatial data | Developer Day London videos and presentations now online | Always Be Testing Webinar on Monday

Add to: File Insurance Business article Teen Photo Images