Mobile home loans - How to qualify and what are the options?

Jessica
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If you're looking for a relatively less costly housing option than a traditional home, then a mobile/manufactured home may be the right choice for you. These homes are built first in factories and then taken to the site, where it may or may not be given a permanent foundation. Though a mobile home may look like a traditional home but it is comparatively little difficult to finance this type of home than to finance a traditional one. With little more effort, however, you can find out a mobile home financing option too. If you want to know about mobile home loans, check out the following topics:

What are the types of mobile home loans?

Mobile home loans or manufactured home loans can be classified into different categories depending on various matters like- land ownership, lending authority, home buyer's financial situation and other factors.

    On the basis of land ownership:


  • Mobile home mortgage loan: If the home has a permanent foundation, you can take out a mortgage loan for buying both the land and home, or either the land or home. The loan covers the sale price of your home as long as it is close to the appraised value of the home. You will also have to pay down a percentage of the purchase price at closing.

    You can approach local banks, lenders, mortgage companies, brokers, and credit unions for loans to purchase or refinance your mobile home. When you apply, the lender will ask for credit report fee, loan application fee, loan doc preparation fee, origination fees, etc. Get a good faith estimate from the lender to get an idea of the costs involved. Also, know how to qualify and what options are available.

  • Personal Property loan: This is meant for purchase of homes on a rented lot in mobile home parks. A personal property loan is offered by retailers who sell mobile homes.

    In order to qualify, you need to put down 10% of purchase price for 10-30 year loans. The interest rate will be 2-3% higher than a mortgage, whether it's fixed or adjustable. If you are looking to refinance, and have a high debt to credit ratio, you may be able to obtain money to make improvements to your home. For improvements on an already owned mobile home, you can go for the Title I loan, but the limit should be within $7500 to be treated as personal property loan.

  • On the basis of lending authority:


  • Federal programs: FHA approved lenders offer Title I loans for the purchase and refinance of manufactured homes for a loan term of 20-25 years at a fixed rate of interest. They also offer Title II mortgage loans on manufactured homes. The maximum loan limit for homes located on land you own is $175,000.

    Besides, the Veteran's Administration (VA) guarantees manufactured home loans for veterans. However, the loans are offered by VA approved private lenders. With this kind of loan, you can borrow up to 95% of the purchase price. There is also the United States Department of Agriculture (USDA) Rural Development program that offers 30 year manufactured home loans for home purchase and repair.

    The above programs are specially meant for first time buyers who can make a down payment and qualify for lower interest rates.

  • State programs: State Housing Finance Authorities/Housing Agencies offer mobile home loans to first time buyers at rates comparatively lower than those offered by private lenders. For instance, lenders approved by the Maine Housing Authority offer a First Home Program. The Connecticut State Housing Finance Authority also offers a program for first time mobile home buyers.

  • Conventional Loans: These loans are offered by private lenders, and banks, with conforming as well as jumbo loan packages ranging from 15-30 year Fixed Rate loans, 3-2-1 Buy down loans, to 6 month-1 year ARMs, and Hybrid ARMs (3/1, 5/1 and 7/1 year loans). There are amortized as well as interest-only options available. Learn more about these popular loan programs.

  • On the bais of home buyer's financial situation:


  • Bad Credit Mobile home loans: These are sub-prime loans offered to those having a "B", "C" or "D" credit rating due to late payments, loan defaults, bankruptcy, or foreclosure. Bad credit mobile home loans can be Fixed Rate Mortgages (FRMs) as well as Adjustable Rate Mortgages (ARMs), but the interest rates and costs associated with these loans are usually high. However, due to the recent crash in the sub-prime lending market, these loans are hard to find. So, if you cannot afford higher payments, repair your credit with our Credit Repair tool.

    You can also request a no-obligation free mortgage quote from a lender who will help you improve your credit before they provide you with a loan. Most of the time these lenders will offer credit assistance for free.

  • Low down payment mobile home loans: Low down payment loans on mobile homes will require you to pay private mortgage insurance to protect the lender if you default. Whether you'll get a low down payment loan will depend on 3 factors :
    • The lender's policies for down payments.
    • Your ability to make mobile home mortgage payments.
    • Your creditworthiness.
    However, a gift from family or friends can help you make the down payment.

  • No income/No asset verification loans: If you're self-employed and unable to verify your income or assets, then this is the right choice for you. Here again, the interest rate and costs are higher because of the perceived higher credit risk to the lender. These are also known as NINA loans.

  • Mobile home land loans: These are loans designed to help you purchase land for your mobile home to rest on. This type of mortgage is typically secured on the purchased land or mobile home park lot, so you will be paying two separate mortgages with separate collateral.

  • On the basis of other factors:


  • Construction loans: These are short term loans designed to help you build a mobile home on property you have already purchased. Short term, high interest construction loans may also be available to help you make improvements on your home or property.

  • Home improvement loans: This type of loan is designed to help you make improvements to your mobile home. An example of this type of loan is a Title 1 Home Improvement loan insured by the FHA. Some states offer special loan programs in addition to the Federal government's tax deduction for certain energy efficient improvements.
  • In addition to the options stated above, there are also mobile home refinance and equity loans available from specific lenders. All you need to do is decide why you want to take out the loan and choose the one that is right for you.
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How to qualify for mobile home mortgages

Mobiles homes built prior to 1976 rarely qualify for mortgage because lenders are concerned about the life expectancy and quick depreciation compared to that of a traditional site-built house. A manufactured home must follow the building standards proposed by Department of Housing and Urban Development (HUD) under the Federal National Manufactured Housing Construction and Safety Standards Act of 1974.

  1. The HUD code requirements:
    • The houses must be built as one, two, or three section homes in a protected building center and then transported on a frame to the site. The wheels and axles must be removed and the mobile home must be fixed to the ground to give it a permanent foundation. As per HUD rules, you need to record form 433(A) which implies that the home is changed from personal to real property due to it's permanent foundation.
    • The home should comply with HUD code restrictions for construction, design, durability, strength, fire resistance, energy efficiency, transportability, and quality.
    • The property should maintain the high standards for heating, plumbing, air conditioning, and thermal systems.
    • The property must pass through strict inspections conducted by a third party.
  2. Ownership Rights:
    The property must be free of any liens unless the lot is managed by cooperative association.

  3. Purpose of the loan:
    • The loan must be taken in order to purchase or refinance only a manufactured home with the lot/land being owned by the borrower, the home and the lot on which it is situated, or only the lot on which the mobile home (already owned by the borrower) will be installed.
    • The home must be the principal residence of the borrower.
    • For a lot loan, the mobile home must be placed on the lot and must have been the principal residence within the last 6 months after the date of the loan.
    • If the loan is meant for a home in a mobile home park, then the lease on the home should extend for at least 5 years beyond the loan term.
  4. Credit Score:
    Borrowers must have a minimum credit score of 680 and above in order to get an affordable interest rate. However, you can try for loans that are not score driven but even these loans (for example: FHA loans) require you to have a minimum credit score of 580 and you should be able to make a down payment of 3.5% of the home price.

  5. Down payment:
    Lenders expect you to put down 5-10% of the purchase price on a newly built home for a loan term of 15-30 years depending upon your credit profile, the price of the home and the type of loan. For a pre-owned home, the down payment is the same but loans are available for 20 years depending upon the factors stated above.
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What about the tax benefits?

If the loan is a mortgage, secured by the mobile home that is your primary residence, then the Federal government will allow you to deduct the interest and property taxes you pay from your income taxes, provided you have purchased the home before September of the tax year. In addition, some states allow you to deduct your property taxes from your state income taxes, provided the Federal timing requirement has been met.

Some states, like Indiana, may permit you to deduct all or part of the rent you pay for the lot your mobile home rests on. In order to determine whether your state will permit you to deduct the lot rent, you should consult a tax professional in your state.
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RDTravis@direcway.com

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Post     Post subject: mobile home refinancing

I want to refinance my mobile home loan to do improvements. I need a loan that does not require a permanent foundation.
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Mini Profile  Caron
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Post     Post subject: RE:mobile home loans

Hi RD Travis
Welcome to MortgageFit forum.

There are mortgage loans that are offered against mobile homes having no permanent foundation. You can apply for mobile home refinance home equity loans that will help you to conduct home improvements apart from refinancing your mobile home. Moreover, the interest charged on such loans is tax-deductible, so it will reduce the actual amount of taxes to be paid.

Most lenders do not approve conforming loans for mobile homes without permanent foundation. You can therefore apply for non-conforming loans or jumbo loans that have higher limits than that offered by the government sponsored agencies - Freddie Mac and Fannie Mae. These government mobile home loans come up with slightly higher interest rates since there is greater risk involved in the process.

Apart from these, there are the VA loans that are offered against such mobile homes but you should be a qualified veteran to avail such a loan.

Moreover, the terms and conditions of home equity loans, VA loans as well as jumbo loans may vary from state to state. So if you let us know the name of the state where you are residing, it will be easier for us to provide you with some more information in this matter.

Hope you have benefited from this information.

Please feel free to post further queries. Also, sign up with us to avail free advice on related issues.

Regards,
Caron.
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Telleta

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Post     Post subject: Criteria for Mobile home refinance

Can i have a exact criteria which i need to look at while going for a mobile home refinance.
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Mini Profile  Caron
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Post     Post subject: RE: Eligibility criteria for mobile home refinance loan

Hi Telleta
Welcome to MortgageFit forum.
In order to avail a mobile home refinance loan, you need to qualify as a borrower and your mobile home should also qualify for the refinance. To qualify as a borrower, you should satisfy the following criteria.
  • A minimum credit score of 620.
  • Your credit history as well as employment history should be impressive.
  • You must not have filed bankruptcy since the past 5 years.
  • You should have made 3 months payments on the existing loan.
  • You must have 2 consecutive years of tax filings in case you are self-employed.

Your mobile home should also fulfill some criteria for the mobile home refinance loan.

  • The mobile home cannot be older than 1977.
  • It should be built according to HUD standards.
  • The loan amount should not be less than $20,000,00.
  • Your mobile home should have been built in 1990 or after, in case you want a cash-out refinance loan.
  • The home can be situated in a park on a leased land.
  • The size of the home should be about 768 square feet.

Apart from these criteria, there can be some others which vary from one lender to another. I would advice that you consult a suitable lender, provided you have already satisfied the above criteria. Also, refer to our section on Refinance before you apply for a loan against your mobile home.

Please feel free to send us your feedback.

Regards,
Caron.
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Tina

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Post     Post subject: single wide mobile home loans

My credit score is 785. My husbands is 660. We have an income of 50,000 per yr. Our employment length at both our jobs is 9.5 yrs. approx. we have a home mortgage now that we intend to turn into rental property. We own a 1.5 acre piece of land with all the utilities newly put on. Land is free and clear. We want to buy a 2280 square ft. single wide. Is this possible? Never late on house payments in 10 yrs. by the way.
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Mini Profile  Niicss
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Post     Post subject: RE

Cool Tina, To me your credit score looks good and the best part is you have never late on house payments in 10yrs. A lot of people look for single wide mobile home loans for bad credit. But glad to know that you are not one of them.

I think you can get a loan with ease, all you need to do is go to any lender and surely you will get a loan with resonable interest rate.

Chill

Niicss
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Mini Profile  Samantha
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Post     Post subject: RE:

Hi Tina

It feels great to hear that you and your husband have good credit scores. I also find that your employment history is appreciable. As Niicss has mentioned, with such good scores and income level you will definitely get mortgage loans for any kind of home that you wish to purchase.

Regarding your home mortgage, you can turn it into rental property but your mortgage note should state that option. Depending on your income and other expenses, you can make monthly payments on the home mortgage and also pay for another mortgage in case you take a second loan to buy the other property.

In case you think of reducing your monthly payments on the home mortgage consider refinancing that loan, but check out if you can get a lower rate. Otherwise you will not benefit from refinancing. Moreover refinance your loan when you are still living in the present home. This is because it costs more to refinance in case of an investment property rather than a primary residence.

Hope you will benefited from the information.

Best wishes for your new home. May God help you.

Thanks,
Samantha.
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leslie clark

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Post     Post subject: simple mobile home loans

my credit is damaged i need a simple mobile loan quickly
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Mini Profile  Samantha
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Post     Post subject: mobile home loans for bad credit

Hi Leslie,

Welcome to MortgageFit Forums.

Don't get disheartened even if your credit has been damaged severely. There are alternative options to get a loan.

Just try to check that your credit doesn't fall back more. We do have a good network of lenders who can help you to overcome this situation. One of them will contact you, analyze your problems and suggest you the best option which you can afford.

God bless you.

Thanks,
Samantha
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Nana

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Post     Post subject: single wide mobile home loans for bad credit

I currently own my 1997 single-wide mobile home. The home sits on a family owned piece of property--which I DO NOT own. I am needing a loan to pay off some of my high intrest loans. Is there something out there for me? My credit is POOR. Please HELP!
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Mini Profile  Samantha
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Hi Nana,

Welcome to MortgageFit Forums.

I understand your problem. It is difficult to get a loan at convenient rate with poor credit. Some banks that offer mobile home loans charge a very high interest rates on the consumers with poor credit records. The main goal will be to look for banks that do mobile home loans with no down payment.

But, don't lose hope. There are different types of mobile home loans available to fit your situation. You can try out government mobile home loans also. Only thing, you have to check which one is convenient to you. Also, I would suggest you as a friend, to try and improve your credit gradually as that can sort out your loan problem considerably.

We do have a wide range of lenders who are sincere and efficient to help people in difficult situations as yours. Kindly sign up with us at free of cost. We shall forward your query to an appropriate lender who will call and discuss with you to suggest the best possible way out.

Feel free to ask if you have further doubts.

God bless you.

For MortgageFit,
Samantha
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Nurse girl

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Post     Post subject: Refinance

My husband and I went through a bankruptcy filed last year, discharged in February /05. We make $70,000 plus a year and our credit scores are only around 450 right now. When we bought our home, we paid about 8% down, but we bought our 10 acres to put it on, drilled a well and have done a lot of improvements including a pool, horse paddock and dog kennel. Homes of less quality with less extras are selling in the neighborhood of $110,000. We reaffirmed our debt and owe approx. $76,000. We would like to refinance with a $20,000 cash out or get a home equity loan for $20,000 to pay for a needed surgery. I have been at my job for 3 years and in the same line of work for 12 years. We currently have an adjustable rate mortgage currently around 10% interest and a 30 year note. We'd like to possibly get a better rate and a shorter loan term but aren't sure if this is possible after bankruptcy. Does it matter that we reaffirmed our debt. We have been 30 days late or less several times over the life of the loan but are current on our payments.
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Mini Profile  Niicss
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Post     Post subject: RE

Hi, can i ask that which bankruptcy did you filed. Is it under chapter 7 or charter 13.

Niicss
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Mini Profile  adonis
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Post     Post subject: RE

Getting a loan thats too with favourable rate is tough after bankruptcy. You have also mentioned that you have been late few times in making your loan payment, again that will going to effect the your credibility when you will go for a loan.

There are many lenders in the industry who offer loans to the borrower with poor credit. Chances of getting a loan with fair rate looks tough but not impossible.

All the best
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