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How to Finance or Refinance Mobile Homes

Sonal Panse Jan 8, 2019
In order to fund your mobile home, you and your property must meet certain requirements. Here are some options available to the homeowner.
'Mobile home' is the term used for prefabricated homes that were built prior to June, 1976. The houses built after this period are called 'manufactured homes'. However, many people still continue to call them mobile homes.
These homes have quite a following in the United States for the reasons given here:
  • They are easier and quicker to set up than the traditional brick and mortar houses.
  • They cost a lot less than traditional homes.
  • They come in various designs and sizes, and provide flexibility.
  • Nowadays, they have a very high standard of manufacturing.
Earlier, this wasn't always the case, therefore, it has given these homes a somewhat bad reputation amongst both buyers and lenders. It is also a fact that these homes depreciate in value over the years. Which means, frankly, that they are not such a great prospect for refinancing.
Though not impossible, you will generally find that lending institutions are less eager to bankroll them, than they are for traditional houses. If you meet their stringent requirements, you can choose from two of the loans; first, for the home only, known as a 'chattel mortgage', and the other for the home along with the land on which it will be set up.
You must meet the conditions mentioned here in order to be eligible for a loan:
  • You must have good to excellent credit, which generally means a credit score of 700 or higher.
  • You must have at least three open credit accounts.
  • You must have had an established credit for at least the past four years.
  • You should be currently employed and must have a steady employment history. If you are self-employed, you should be able to produce tax filings for at least the past two years.
  • You must have no recent history of repossession or bankruptcy.
  • If there are any cosigners, they should be individuals that are going to be residing in the home. You cannot cosign a loan if you don't intend to live in the mortgaged home.
  • You must be able to make a 5% down payment.
Most lenders will offer you a loan for a maximum term of twenty-five years or for a minimum term of seven years. The interest rate you qualify for depends upon:
  • The amount of down payment that you make
  • Your credit standing
  • Your employment history
  • The state in which you reside
The mobile home, for which you need financial assistance, must meet the conditions listed here:
  • It should have been built on or after 1977 and according to HUD standards. It must have a notice inside, stating this fact.
  • It should be over 8 ft. wide and must cover an area of at least 700 sq. ft.
  • It must be situated either in a community park, on a leased land, or on a land owned by the buyer.
  • If it is in a community park, the owner should have been approved to live there, beside the community office, prior to making the loan application.
  • It should have had its wheels, shafts, and hitches removed.
  • It should be securely affixed on to a permanent foundation.
  • If you're refinancing it, it must not require any major repair works.
  • The home must undergo an independent professional appraisal or inspection.
Things to keep in mind when applying for a loan:
  • Check prices offered by different home companies. For pre-owned homes, check prices of the other up-for-sale homes in the area. This way you can find out what the current market price is, whether you're being asked a reasonable sum, and also have a wider choice.
  • Contact a reputed, well-qualified lending institution which is independent and not connected in any way to the home dealers you're buying from.
  • Be prepared to have your credit profile, employment history, and verifiable income thoroughly checked by the lender.
  • These loans usually do not cover the transport costs for moving the home to the site and any required property or community taxes.
  • You may be required to pay closing fees and commissions on the loan. Ask in advance what those will be, so you're not unpleasantly surprised.
  • Don't overstretch yourself with too many other borrowings.
Disclaimer: This information is for reference purposes only and does not directly recommend any specific financial course of action.