April 12, 2017
Manufactured housing construction has come a long way since
its early days when manufactured homes were referred to as mobile homes and
indeed were very mobile. There were wheels attached to the home and the unit
wasn’t necessarily permanently attached to a foundation. If the owner wanted
to, the unit could be hitched to an automobile or truck and moved away. As
such, when financing a mobile home there really was only one choice and that
was to take out an installment loan just like financing an automobile with
higher rates and shorter loan terms. A mortgage today however for a
manufactured home is available providing borrowers with more favorable terms
and when financed properly a loan for a manufactured home is just as
competitive as most any other option.
The manufactured home must be considered as real estate and
taxed as real property. A manufactured home is built at the factory and
delivered to the dealer. Sometimes a manufactured home is used interchangeably with
a modular home but they’re different. A modular home is built in components and
then delivered to the job for final construction. The manufactured home must be
permanently attached to the ground, wheels removed (if any) and the owner must
own the lot as well as the manufactured home.
The lender will appraise the property and order a new
appraisal from a licensed appraiser. The appraiser must verify there are
similar homes in the area that have recently sold. Most manufactured homes are
within areas designated for manufactured housing as there are no “stick built”
homes in the neighborhood. Most zoning regulations actually require
manufactured housing to be located in an approved area.
The lender will also verify sufficient income to qualify for
the new mortgage by reviewing copies of a borrower’s most recent pay check
stubs covering a 30 day period in addition to the most recent two years of W2
forms. These two years also count to verify the requirement the borrower has an
employment history of at least two years. If the borrower is self-employed then
copies of the most recent two years of federal income tax returns will be
required. Credit will also be reviewed along with credit scores. Sufficient
funds to close including down payment and closing costs will be verified with
current bank statements.
Loans for manufactured housing will also ask for a down
payment with most down payment requirements as little as 5.0% for a
conventional loan and the standard 3.5% down payment for an FHA mortgage.
Interest rates for both will be slightly higher compared to a traditional loan.
VA loans don’t require a down payment but for a manufactured home there is a
minimum down payment of 5.0% required while a USDA loan can still be a zero
down loan. However, the property being financed cannot be an existing property
but brand new.
There aren’t as many lenders who offer mortgages for
manufactured housing but they are available. If you’re thinking of buying
manufactured home its’ best to speak with a loan officer upfront so you’re
aware of all the details and loan requirements.
For more information or questions about mortgage loans, please call (855) 757-8748.