Mobile and manufactured homes are all over the place, and they are often great choices for people who want to build their own homes or want to live in a certain area. But how are they different in the world of mortgages? Is financing a mobile home even possible? Is it necessary? Let’s dive in.
We’ve written a whole blog post on how manufactured and modular homes are different. Mobile homes and manufactured homes are also a bit different in that mobile homes don’t typically have a foundation while manufactured homes do. Both types of homes are built someplace else and brought to the home’s new location, however. Manufactured homes are finished on-site while mobile homes are brought to the site completely finished.
Financing these types of homes are a bit different, as well. Considering the type of home, your loan options may be more limited, and you may have to adhere to different regulations than a traditional home. Both of these types of homes can provide more flexibility than a traditional home, but that doesn’t mean financing them is as flexible.
When people are making decisions about the kind of house they want to purchase, or build, mobile and manufactured homes are frequently on their minds. These kinds of homes are often considered to be cheaper, although that may not necessarily be true. Manufactured homes tend to cost about the same as their same-sized traditional counterparts. Mobile homes can run upwards of $100,000. Both of these would need financing through a mortgage, assuming the buyers don’t have that cash in hand.
Commonly, down payments on traditional homes are around 20%. Because of the style of home, manufactured and mobile homes are often financed through government-backed loans like FHA or USDA which require a much, much lower down payment. Most of the time, these loans can be obtained with as low as a 3.5% down payment.
The hard part? The rules and regulations. Not only do government-backed loans already have loads of regulations in regard to the condition of homes, but also have requirements for the buyer as well. It doesn’t stop there – manufactured and mobile homes have their own set of requirements.
So how do you make sure your mobile or manufactured home is able to be financed? Mortgage lenders are looking for one thing: permanence. Permanence means you plan on staying in your home for a while. It means you aren’t planning to move out of the area and leave the community. Permanence means stability, and stability is the core of all good financial decisions.
In order to finance a mobile home, you’ll need to emphasize that permanence. Axles and wheels must be removed from the home. Additionally, you need to have a note from the title company that states the home is in its permanent spot. With these two things taken care of, financing your mobile home will be simple!
If a mobile or manufactured home is your choice of homes, have no fear of the mortgage process. Follow the above steps and you’ll have your dream home in no time.
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