How to Get a Mobile Home Loan in 5 Easy Steps
A new manufactured home costs an average of $76,400 for a single size in November 2021 and $139,900 for a double size during the same period, according to the US Census Bureau. For anyone considering buying a mobile home, this is good information to have, and luckily there are loans available to help people finance a mobile or manufactured home. Is it difficult to get a loan for a mobile home? This may depend on each buyer’s specific situation. It’s important for mobile home buyers to know what types of loans are available, how to assess their finances to determine what types of loans are available, and how to find and apply for the best mobile home loans. Follow the steps below, which will show you how to buy a mobile home using a loan.
Before you start…
The difference between a mobile home and a manufactured home can be a common point of confusion for buyers, but the difference is actually quite simple. To qualify as a mobile home, it must have been factory built prior to the introduction of the National Mobile Home Building and Safety Standards Act of 1974 and the HUD Manufactured Home Building and Safety Standards introduced in 1976. Prefabricated houses are those that have been manufactured in a factory. -built after 1976 once the new safety standards were officially in place. Lenders tend to avoid financing pre-1976 mobile homes because they are less secure and there is a higher chance of the home being damaged or destroyed. However, despite the difference, the terms “mobile home” and “manufactured home” are often used interchangeably.
It is also important to note that a mobile home loan is different from a traditional home loan. For example, some programs may have stricter income limits. The house may also have to meet certain criteria. For example, if the house is on wheels, it may be considered a vehicle, which may affect the type of loan. There may also be size requirements for the house and different classifications based on the foundation, just for starters.
STEP 1: Assess your finances and determine a flexible budget.
Mobile home buyers wondering how to get a mobile home loan can start by assessing their finances. They can start by looking at their credit score, as this can affect the types of loans they qualify for and can have a direct influence on the interest rates they will pay. In general, the higher a person’s credit score, the lower the interest rates they can qualify for. Borrowers should also see how much they can reasonably spend on a down payment. Another important factor is to look at the debt-to-income ratio (DTI), which compares the borrower’s current debt amount to their regular monthly income. The borrower should assess whether he can afford the loan repayments based on the amount of money he is bringing in and the amount of debt he is currently repaying, and in cases where the borrower has a high DTI, he may find it much more difficult or even impossible to obtain a loan. Borrowers can use an online home loan calculator to find out how loan costs and interest rate variables will fit into their current budget.
If the borrower finds that he is not in a good financial position to take out a loan, he can try to resolve any problems before applying for a loan. Options may include consolidating debt, adjusting lifestyles to budgets, or finding ways to generate additional income.
STEP 2: Learn about the types of mobile home loans available and their costs.
Buyers looking for financing for a mobile home should take the time to familiarize themselves with all the types of loans available in order to find the option that is best for them. Surprisingly, some mobile or manufactured homes may actually qualify for more traditional home loans. They often have to meet certain criteria, including meeting specific size requirements, the borrower owning rather than renting the land, the home having a permanent frame, and whether the home qualifies as personal property or real estate at tax purposes. The Fannie Mae and Freddie Mac programs are examples of conventional loans that can cover manufactured homes.
Government loan programs through the FHA, VA, and USDA may also cover manufactured homes. There are also chattel mortgages, sometimes called chattel loans, which are specifically created for the purpose of creating a loan for manufactured homes and other chattels. Finally, another common option is to look into personal loans, although these often come with much higher interest rates. Vendor/manufacturer financing can also help someone get a mobile home.
STEP 3: Determine if you need a loan for the land only, the mobile home only or both.
Remember that people who live in mobile or manufactured homes often have to cover the cost of the land itself. Sometimes the land can be leased for a certain amount each month, but if the land is leased, it may affect the borrower’s eligibility for certain types of loans. For example, people looking for loans for mobile homes in parks might need to look into specific types of loans.
Some loans can cover both the purchase of the land and the mobile home. An example of this is a personal loan, which provides a fixed amount of money for the borrower to do whatever they want, or an FHA Title I loan, which can finance the purchase of the house only, the land only or both. and the batch. Alternatively, the finance appraisal may show that the borrower could directly pay for the land or mobile home while financing the other. Borrowers can also work with banks that finance mobile homes with land or look for loan types that focus on financing a mobile home with land that has been purchased (not leased), such as an FHA Title II loan. , which requires that the house be permanently attached to land owned by the borrower.
STEP 4: Request and compare quotes from potential lenders.
The next step is for the borrower to contact lenders who offer the type of loan they need. The location of these loans depends on the type of loan the borrower has determined is the right one for them. For example, many credit card companies offer personal loans. Those looking for more conventional types of home loans may want to check with banks, credit unions, or other financial institutions.
A borrower can also choose to get quotes for different types of loans to narrow down the loans that suit them. Some websites may also offer the ability for a potential borrower to compare loan quotes side-by-side. It’s important to note that quotes are often no obligation and are usually free, so borrowers should generally be wary of lenders who want a commitment right away.
STEP 5: Apply for a loan from the provider of your choice.
The final step is to apply for a loan from the provider that offers the most attractive loan terms and rates. The borrower can also check with lenders on how to get pre-approved for a mobile home loan. It is important to work closely with agents or credit professionals to ensure that all documents are in order. The loan application may require a wide variety of detailed documents, such as recent pay stubs to provide proof of income, tax returns, bank statements, proof of identity and the loan application, for some examples . It is common for loan applications to also require proof of credit history. All of this paperwork is to ensure that the borrower can repay the loan and that the lender is not taking an unreasonable risk in granting a loan.
By following these five steps, mobile home buyers should be able to find the right mobile home loan for their financial situation. Remember to get a loan only from reputable lenders, such as well-known financial institutions, government programs, well-known personal lenders, or programs related to the manufacturer of the manufactured home. Even if a company seems well known, it’s a good idea to check its background with consumer bureaus or organizations such as the Better Business Bureau and Consumer Reports. Beware of finding a lender using search terms such as “mobile home loans with bad credit, guaranteed approval”.