Financing Manufactured Housing As Real Estate
If your manufactured house is classified as real property, you may be able to finance it with a mortgage. Typically, it has to be built after 1976 . The loans work almost exactly the same as financing for traditional stick-built houses.
Most likely, youll get a Fannie Mae, Freddie Mac or government-backed mortgage. The VA, FHA and USDA all have manufactured home programs, but each has different rules.
You may need slightly higher down payments, slightly better credit scores, and/or pay higher fees. But these programs are still the most affordable financing for manufactured houses.
What Is A Mobile Home
Manufactured homes are often referred to as mobile homes, however, the two are different. In 1976, the U.S. Department of Housing and Urban Development , implemented the Manufactured Home Construction and Safety Standards that regulated mobile home construction. Manufactured homes built before June 15, 1976, are mobile homes, or trailers as theyre often called, and those made after that date are manufactured homes.
While mobile home is a dated term, it continues to be used in reference to manufactured homes.
Fha Manufactured Home Loans Faqs
Do FHA loans cover manufactured homes?
Yes, FHA loans cover manufactured homes. If you meet the credit and borrower requirements, you may be able to use an FHA loan to finance the home and the land on which it will sit.
Can you get a 30-year loan on a manufactured home?
Some conventional lenders may offer 30-year terms on a manufactured home loan. FHA Title I manufactured home loans have a maximum loan term of 20 years.
What type of loan is needed for a manufactured home?
Multiple types of loans are available for manufactured homes. The FHA is one of the most advantageous due to the low 3.5% down payment, flexible credit scores, and attractive terms. But folks interested in a manufactured home can also look into VA, USDA, and conventional loans if they meet the requirements, as well as chattel loans.
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Mobile Manufactured Or Modular
Mobile homes are factory-built homes made before June 15, 1976. They might be very nice homes, but they were built before regulators required certain safety standards. Mostalthough not alllenders are reluctant to lend on these properties.
Manufactured homes are factory-built homes constructed after June 15, 1976. They’re subject to the National Manufactured Housing Construction and Safety Standards Act of 1974, and they’re required to meet safety standards set by the U.S. Department of Housing and Urban Development . These rules are often referred to as the “HUD Code.” Manufactured homes are built on a permanent metal chassis and can be moved after installation, but doing so can interfere with financing.
Modular homes are factory-built homes that are assembled on site and are required to meet all the same local building codes as site-built homes rather than those required by the HUD Code. They’re usually permanently installed on a concrete foundation. Like site-built homes, modular homes tend to hold value and appreciate more than manufactured or mobile homes, so its easier to get loans for these homes.
What you call a mobile home is probably a manufactured home, even though the home isor once wasmobile. Either term works, but most lenders avoid lending on properties that are categorized as mobile homes.
Many Lenders Still Dont Know That Manufactured Homesappreciate In Value
Another reason why getting a manufactured home loan with land is more difficult than obtaining a chattel loan is that lenders believe that manufactured homes depreciate in value because they dont meet the latest HUD foundation requirements. While this may be true for the manufactured homes built a few decades ago, HUD has implemented new structural requirements over the past decade. Recently, CFED has concluded that well-built manufactured homes, properly installed on a permanent foundation appreciate in value just as site-built homes. What’s more, increasing numbers of lenders have started to expand the availability of conventional mortgage financing to manufactured home buyers, indirectly recognizing the appreciation in value of the manufactured homes affixed permanently to land.
If you’re looking for an affordable financing option for a manufactured home installed on permanent foundation, dont just accept the first chattel loan offered by a lender, as you may qualify for a conventional mortgage with better terms. To learn more about these loans or to find out if you qualify for a manufactured home loan with land, contact our outstanding team of financial experts today.
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Why Live At Eastview
Welcome to Eastview, a unique manufactured home community designed for the convenience of our residents. Our experienced and professional management staff handles the day-to-day responsibilities of the community, so you can enjoy the beautifully landscaped grounds and contemporary amenities planned with your family in mind. Located just 1 mile from Downtown Gillette, our community sits inside of a quality school district. Around your home, there are many things to do such as shopping at Walmart, Home Depot, and Marshalls, as well as dining out at favorite local restaurants like Pizza Carrello and The Coop. Nearby, there are fun activities and attractions such as Campbell County Museum, Dalbey Memorial Park, and Frontier Relics Museum for friends and family to enjoy. In the city, there is local transportation such as buses for your convenience of getting around. Also bring your furry family members with you because we are a pet-friendly community. Let us help you make your dream of home ownership a reality within our community!
Va Loans For Manufactured Homes
Loans backed by the U.S. Department of Veterans Affairs provide financing options to military service members, veterans and surviving spouses. VA loans for manufactured homes require that the homes be attached to a permanent foundation on land owned by the borrower or a manufactured home and land together. The home must qualify as real property.
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Tie Downs And Other Hud Guidelines
Tie downs being up to current code is the biggest issue we run into when borrowers choose to buy a manufactured home. On October 20th of 2008 HUD increased the size of the requirement for the knuckle on the tie downs that attaches to the manufactured home or what a lot of people still call mobile homes. This means that if the manufactured home was anchored before October of 2008 there is a good chance that the tie downs will not be up to current code. When you purchase a manufactured home an engineer is required to come out and inspect the home and make sure that it is up to code unless you are using conventional financing.
If the property has changed hands since 2008 and the purchaser used a conforming loan then it should have been retrofitted to current standards. Additionally the engineer will inspect the siding around the bottom of the home making sure that there are no holes larger than an inch. Preparing for this inspection beforehand is always smart because a hole in the siding is easily remedied with spray foam. Its always best when the listing agent for a manufactured home preps the seller for the possibility that they may need to pay for their to be retrofitted if it was anchored before October 20th of 2008.
Manufactured Home Vs Mobile Home
A mobile home refers to manufactured homes produced before June 15, 1976. As the name implies, these homes could be moved around. Mobile homes received a bad reputation thanks to early models, which often werent built with quality in mind and depreciated in value quickly.
Mobile homes have come a long way since then, however. Today, modern mobile homes are not really meant to be moved more than once. Structurally, theyre also much safer and comfortable. In fact, mobile homes offer a variety of floorplans and amenities, including fully equipped kitchens and spacious bedrooms.
Newer mobile homes built after June 15, 1976, are now officially referred to as manufactured homes, though they are still often called mobile homes casually. Mobile homes built before this period dont qualify as manufactured homes, even if upgrades have been made.
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Pros And Cons Of Buying A Manufactured Home
Manufactured homes represented about 10% of new single-family home starts as of 2018, according to a report from the Manufactured Housing Institute. Industry experts believe the demand for manufactured homes will increase as the lack of affordable housing persists. Consider the pros and cons of owning a manufactured home.
How To Find An Fha Manufactured Home Lender
You may need to shop around to find an FHA-approved lender that offers loans for manufactured homes. To start, search for FHA-approved lenders in your area using the HUD lender list.
When you talk to lenders, discuss whether the loan officer has experience working with FHA manufactured home loans. Consider choosing an experienced lender over the lowest loan pricing with this type of mortgage, given all the extra hoops you need to jump through to get both the manufactured home and the FHA loan approved.
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Start Looking For Financing Options
Choose the type of loan youll use and compare different lenders offerings.
Mobile home interest rates and fees can vary widely between lenders, so take the time to shop around. Try to find a loan that has low fees and interest rates so you can spend as little as possible over the life of the loan.
Why its important: Doing your research and shopping around can save you thousands of dollars over the life of the loan, as well as help you secure more favorable loan terms. In addition, searching for financing options early will help ensure there is a loan available to help you make the purchase.
What Is A Chattel Loan
If the manufactured home will not be permanently installed on owned land it will remain classified as personal property. These homes are only eligible for chattel loans.
Investopedia states that in some parts of the country chattel home loans are referred to as simple security agreements and the terms personal property security and a lien on personal property are synonyms for a chattel mortgage. Interest rates on these loans are typically much higher than traditional mortgages and during an active chattel loan, the lender has conditional ownership of the property .
Chattel loans will have an APR that is usually 1-2% higher than a traditional loan and will not have the same protections as traditional mortgages. Average terms for a chattel loan are between 15-23 years whereas a traditional mortgage can have termed as long as 30 years. A lender can take possession of the manufactured home much quicker than a traditional mortgage lender after delinquency. In addition, it is very difficult to get a chattel loan refinanced.
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Foundation And Land For The Home
You may decide or local laws may require you to put the home on a foundation. Those costs can escalate quickly, depending on the type of foundation you choose.
According to one manufactured home company, slab or pier and beam foundations are among the most affordable. But if you decide to create a basement foundation to add some living space to the home, you could pay substantially more. Depending on the square footage of your manufactured home, you could pay tens of thousands of dollars to put down a foundation.
Then theres the land itself. If you buy the land, will it need to be cleared and readied for a foundation to be built? Consider the labor and materials costs if so.
There are always costs and trade-offs, and its important to see the full picture before you make a decision.
You can sidestep some of those expenses by purchasing an existing home thats already on a foundation. But if youre buying directly from the factory and need to arrange for a foundation and land clearing, make sure to work those into your budget.
You may also be able to rent land in a manufactured home community or mobile home park, though youll want to look carefully at the terms and costs of that as well. Make sure its affordable, because you may find youre better off purchasing land yourself after all.
Why Are Mobile Homes Harder To Finance
One feature of mobile homes is obviously their mobility. So it is theoretically possible to take a huge residential loan on very favorable terms. Then you could hitch the new house up to your truck and drag it out of state or even out of the country. For this reason, lenders differentiate between manufactured homes as real estate and truly movable homes.
And thats one reason that car loans usually come with shorter terms and higher interest rates. And that there is an entire industry built around recovering runaway autos.
In addition, most people expect their homes to increase in value as long as they own them, as long as they maintain the property. But manufactured houses tend to depreciate, or lose value, as they age. This also makes lenders less likely to approve loans for these homes.
However, in areas where more people own mobile homes, its probably easier to find financing. The darker areas in the map below indicate areas with a higher percentage of manufactured or mobile units.
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Differences Between Modular And Manufactured Homes
While both manufactured and modular homes are cost-effective alternatives to traditional site-built homes, there are some key differences to consider when deciding between the two.
If you had your heart set on a site-built home but want to take a more cost-conscious and efficient approach, a modular home might be the way to go. After all, once theyre assembled, modular homes are essentially the same as site-built homes, sitting on a permanent foundation.
If you have a wanderers heart and like the idea of being able to pack up and move to a new location whenever the desire hits you, then a manufactured home might be the right route. Its all about preference and what you feel is best for your or your familys situation. Beyond the obvious differences in mobility and permanence, there are more facets to explore when deciding between a modular or manufactured home.
Lets look at some other important differences in these housing types.
Considerations For Financing A Manufactured Home
When you are purchasing the land as well as the home, you have many different financing options. These often depend on:
- The type of foundation you have, i.e., cement basement, concrete footing, wooden blocks. You may find that lenders are leery of homes that can easily be moved away under the cover of night.
- The age of the home. What is the life left in this home? The newer it is the more likely you will get financing. The lender will want their money back before the house wears out.
- The way it was constructed. As per the definitions above, the lender will want to know the materials and methods used to construct the home.
- The down payment is critical. If you put less than 20% down your home will be under more scrutiny by Canada Mortgage and Housing. The higher your down payment, the better.
- Your lender will most certainly insist on a home inspection and a professional appraisal to ensure your home is worth what you have offered .
If you are purchasing the land, the home has normal services and is in a permanent location and in good condition, often normal lending rules will apply. Your real estate professional will be able to navigate you through the process.
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Beat The Bidding Wars
Manufactured homes can be more affordable than in-site homes and may provide housing options if the demand for homes in your area is fierce. If youre in the market for a manufactured home, FHA manufactured home loans offer attractive terms and low down payment requirements.
To find out whether you qualify for an FHA loan and how much a manufactured home may actually cost you, talk with an FHA-approved lender.
When Is A Mobile Home A House And When It Is A Car
To be a house and not a car, your manufactured home must pass a few tests, HUD says:
- The site must have permanent water and sewer hookup
- Facilities are approved by the local municipal authority, ifavailable at the site
- An all-weather roadway must serve the site
- The entire property must be taxed as real estate
- The towing hitch or running gear must have been removed
- No part of the finished grade level under the home is belowthe 100-year flood level
- Structural integrity must have been maintained duringtransportation and sufficient anchoring
- Support and stability must be evident
These are not all criteria. Heres a link to the whole set of guidelines. Alternatively, have an approved appraiser assess and value the property.
If you pay your annual taxes to the DMV, you definitely have a house. However, you can convert a manufactured home to real property by following the guidelines listed in the link above.
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How To Buy Property For A Manufactured Home
If you decide to buy property, its vital to first check the local zoning restrictions for these types of structures. There may also be restrictions on land use, which could dictate the size of the home or prevent you from using it to run a business.
When evaluating property, you should also consider how easy it is to get to the location, the different permits required, soil quality and how much work it will take to get the area and foundation ready.
If youre interested in purchasing a plot of land for regular living, you may be able to find space in a residential neighborhood. However, if youre looking for more outdoor space, it may be a good idea to explore land options in more remote areas.
If you need financing for the purchase, you have a couple of options. One is to take out a loan for the land and a separate loan for the manufactured home. However, this could be less convenient, as you have to qualify for two different loans and manage two payments. The other option is to take out a loan that includes both the land and the property.
