Mobile Home loans - There are two types of mobile home loans and normally a lender does one or the other. The first is a personal property mortgage and the other is a real property mortgage. Today I will cover only personal property mortgages.
A Personal Property Mortgage - Also known as a Chattel Mortgage - Homeowners either live or plan to live in a mobile home park or manufactured home community, leased land, family land or land that is not attached to the home by way of deed. For a person with good credit and a good source of income, these types of loans/mortgages are by far the easiest and least expensive to obtain. Unlike what many people believe there are some really great rates available.
However, to obtain lender direct rates, you and the home do need to qualify and this is where most people fall off the grid.
Good Credit - Unlike real property mortgages, your Equifax Score is crucial. Most lenders, including JCF Lending Group are looking for a minimum Equifax score of 660+ and again that is just the starting point. The best rates start at a score of 740+. Unlike popular belief, a personal property mortgage will be tougher to obtain credit wise that that of a real property mortgage. Other important credit factors are credit depth and installment credit. Most lenders require a minimum of 4 years of credit experience with at least a 24 month payment record on an auto loan. If a person has filed bankruptcy the same rule applies after the discharge date.
Year of Home - Most personal property lenders will extend credit to mobile and manufactured homes no older than 20 years. As an industry rule, single wides can be no older than 1994 and double wides can be as old as 1976. In California, lenders will go back as far as 1970 for double and triple wides. Older homes will require a larger down payment or in the case of a refinance, a larger equity share in the home.
Placement of Home - Most lenders will require that the home is set up and in livable and/or move-in condition prior to the funding of the loan. The exception to this rule would be consumers buying homes from dealers who have contractual agreements with lenders.
Buying a New Manufactured Home - If you are buying a new manufactured home there must be a dealer involved. Financing for a new home purchase should be provided by the dealer and the lenders that they have contracted with. Manufactured home dealers that have a strong reputation and positive financial resources will have the most competitive rates in the industry. Likewise, dealers who have a poor reputation or have limited financial resources may have no direct lending sources. Consumers should keep this in mind when shopping for a new manufactured home. The dealers reputation will be indicated by the rates they offer. Dealers who suggest a mortgage broker or other 3rd party source should be avoided, if possible. Remember your dealer will be your service provider for the warranty on your home. You want a dealer who will still be around in 5 years.
Used Home Purchases - Keeping the age restrictions above in mind, getting financing for a used mobile or manufactured home could not be simpler. You can choose to buy a home being sold by a Realtor or by owner. Most lenders provide all of the necessary paperwork and will take care of titling the home in your name.
Down Payment - Currently all National Lenders require a minimum 5% down payment and/or 5% equity in your home in the case of refinance. The days of 100% financing are gone. The best rates can normally be achieved with 20% down or 20% equity in their home, as in the case of a refinance.
Term Length - Personal property mortgages normally run between 7 and 30 years. Normally 30 year terms are restricted to new homes. Always keep in mind that the shorter the term. the more equity you will build. Many lenders including JCF Lending Group, limit homes or smaller balances to 15 years.
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