Manufactured homes account for 6% of all occupied homes, but a much smaller percentage of home loans, according to a Consumer Financial Protection Bureau (CFPB) report. Many people still refer to this type of housing as a mobile home, a term that refers to structures built before HUD code standards were established in 1976.
But whatever you call them, Living in manufactured homes tends to be "financially vulnerable," as the CFPB puts it – older people or low-income families who tend to be offered less favorable terms and conditions for any kind of loan.
According to the CFPB, about 32% of households in a manufactured home are headed by a retiree. Their median income is half that of other families, and they have about a quarter of the median net worth of other households. Also, manufactured homes are not always eligible for a traditional mortgage on any terms because the future homeowner does not own the land on which they are located.
Before you take out a loan for a manufactured home, it's important to know what your options are and make sure you apply for the most favorable form of financing. Never accept a credit offer before checking your choices, especially if you are putting the house on a property you own.
Limited financing options
There are only two types of manufactured home financing: a conventional mortgage and a backup mortgage. Most people understand the traditional mortgage: find an existing home or build in, then apply for a 30-year fixed mortgage or other mortgage type and lock a very favorable interest rate.
However, if the manufactured home is not permanently located on the land on which it sits – and if the homeowner only rents the land on which the manufactured home is located – the building is considered personal property. From Real Estate. In 2013, only 14% of new manufactured homes were designated as real property. This forced nearly 65% of borrowers into a loan, a category that offers far fewer protections and far less generous terms.
Traditional mortgages. When a structure is considered real estate, all the protections associated with mortgages apply. The borrower can obtain an FHA-insured mortgage or a Fannie Mae-backed mortgage, which also supports loans on manufactured homes.
The loan is covered by consumer protection laws that apply to traditional mortgages, including several state foreclosure and repossession laws that do not apply to real estate loans. Click here to read information from the U.S. Department of Housing and Urban Development about FHA-approved lenders for manufactured (mobile) homes."And read FHA loans: An option for manufactured homes, too .
Mortgage loans are likely to be available at very reasonable rates:
Chattel mortgages. A Chattel loan allows the lender to hold a lien against the moveable property (the home) until the loan is satisfied The differences from a mortgage loan are huge.
First and most important, secured loans are much higher. 21 st Mortgage Corporation, one of the largest originators of chattel loans, says that prices for manufactured homes start at 6.99%, and even those with covered loans can expect significantly higher interest rates.
Time, which lowers the total amount of interest paid.However, 21.9 Mortgage offers terms as far as 23 years.Finally, secured loans often have lower closing costs and the time it takes to close on the loan is often much shorter. The bottom line It is important that you apply for the right kind. Mortgage. The CFPB is concerned because at least 65% of manufactured homeowners who also own their land have taken out a gambling loan. Some of these owners may have reasons for wanting a loan fund – such as not wanting to give up control of their land – but the likely problem is not knowing that a traditional mortgage is available to them.