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Mobile Home Financing

The real estate bonanza has reached its peak, leaving ownership of a traditional single-family home a distant dream being far beyond the price range of most potential home-buyers. Mobile Homes, which can typically be bought at 20%-40% of the price of single-family home, have become an increasingly popular (and for many, the only) option for home ownership. The following are some of the factors to take into consideration to help you decide if buying and mobile home financing is going to make the most sense, and to help you get the best mobile home financing terms possible.

A mobile home is defined as any home that was manufactured at a remote facility, then transported to an offsite location. One major characteristic of a mobile home is that the land underneath the home is not owned by the mobile home resident (it is usually situated in a mobile home park or on leased land). Because the land is not owned by the resident, it cannot legally be attached to the title of the land (the deed to the land will not mention the resident), and so the home is treated as “personal property”, as opposed to “real property”. In cases where the land and the mobile home are sold together and the home is permanently attached, it is then considered real property and given mobile home financing treatment similar to a single family home.

The remainder of this article deals specifically with non-attached mobile homes.

No matter who you go through for mobile home financing, the following guidelines are almost universal in the mobile home financing industry:

* Mobile home financing interest rate will typically range from an 7.75% to a 10.75%.

* Mobile homes built after 1976 qualify for the better mobile home financing rates and programs (i.e. Post HUD homes).

* Obtaining mobile home financing on a home built before 1970 can be difficult; you can expect a high rate and a large (at least 30%) down payment requirement.

* Mobile home financing rates on single wide homes are usually 0.5% to 1% higher than on multi-wide homes.

* The longest mobile home financing term is usually twenty years (Blue Coast does offer a 30 Year Fixed).

* Many mobile home financing programs require a minimum credit score (Fico score) of 660.

* If you cannot verify that you earn at least twice as much as your total monthly debt (including the proposed new home payment) with pay stubs, tax returns, or pension/social security/disability award letters, most mobile home financing lenders will require you to put at least 30% down, and charge a higher rate.

* There is no zero down mobile home financing, the minimum down payment is 5%.

* The best mobile home financing rates come at 20% down or more.

Mobile home financing is harder to qualify for than single family home loans. If you’re thinking of buying a mobile home, the first thing to do is to make sure your mobile home financing is in order by becoming pre-approved. Mobile home lenders are surprisingly rare. If you walk in to your local bank or credit union, it is extremely unlikely that they’ll have programs for mobile home financing, because mobile home loans are difficult to sell on the secondary market (the vast majority of all mortgage loans end up being sold to insurance companies or foreign investors on Wall Street, even if your original mobile home financing lender continues sending you the monthly bill on the new note holder’s behalf). Most mobile home financing lenders are not wishing to tie up their capital for long-term un-sellable mobile home financing loans.

You should contact a mobile home lender for a pre-approval and a quote. A legitimate mobile home financing lender will not charge you any out-of-pocket fees for a loan pre-approval, and a pre-approval is commonly necessary to tell you with certainty what your mobile home financing interest rates will be. Along with the rate, a mobile home financing specialist can let you know what your monthly payments will be at different loan amounts, which can be useful to help you ascertain how much of a mobile home you can afford.

If you are considering buying from a dealer, they’ll most definitely have a mobile home financing lending partner in place, and try to convince you to use their mobile home financing lenders. Using the dealer’s lender can sometimes be more convenient, but the drawback is that the mobile home financing terms you get through the dealer’s lender are usually worse in rate and/or fees than you would obtain from an outside mobile home financing lender. The dealer’s mobile home financing lenders often feel they have a confined audience, and since the competition is scarce to begin with, they often feel no need to offer competitive loan terms. Many times even a “normally competitive” mobile home financing lender is unable to offer the best mobile home financing terms when using a dealer referral, because in order to have the privilege of being the “dealer’s lender”, they must offer a kickback to the dealer (pay the dealer $2000 for every referral), and they must pass this cost on to you either in the form of increased mobile home financing fees or a higher interest rate. If you don’t have the time/inclination to find a good 3rd party mobile home financing lender and you don’t mind paying a slightly higher rate and/or fees, going through the dealer’s mobile home financing lender is probably the most convenient route.

Since a mobile home purchase is a huge investment, it is crucial to carefully consider all of the factors. A 1977 multi-wide home that costs $100,000 may have lower monthly payments than a 1975 single wide that sells for $80,000, because the more expensive home will carry a much lower interest rate. The age of the home, size of the home, and your down payment all play a big role in determining your mobile home financing terms. SJA

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