Manufactured housing has come a long way over the years, so much so that many new manufactured housing looks nothing like a traditional mobile home. But it is a certain lifestyle, a lifestyle that many choose do to certain advantages owning a manufactured home. Manufactured homes are more affordable than their stick-built counterparts. Buyers can select from a variety of floor plans and amenities then have the factor build the home to suit the construction process is quick as in weeks, not months. They’re energy efficient, too. But if you already own a manufactured home and are making monthly payments, should you refinance your manufactured home and is your manufactured home eligible?
There are two primary ways of financing a manufactured home, a personal (chattel) loan and a real estate loan. To get today’s more competitive rates, your manufactured home must meet certain conditions. To be eligible, the home must be affixed to a permanent foundation that meets standards set by the Department of Housing and Urban Development, or HUD. If you already have an FHA loan on your manufactured home, your foundation has already passed this test. Accordingly, the home must be listed as real estate property and not personal property. If it’s personal property, you’ll have to get title changed to real estate, sometimes not an easy chore to do. Interest rates for personal property on a manufactured home are much higher than an FHA loan for example.
And finally the homeowner must own the land where the home sits or otherwise have a qualified lease agreement that meets the so-called FHA Title I standards. Few lenders offer this program, however because so few properties meet the required conditions. If the property meets these requirements, you’re eligible to refinance. But should you?
Refinancing to a lower rate is the most common reason to refinance an existing manufactured housing loan. To decide whether or not a refinance makes sense, compare the difference in the current mortgage payment and the proposed payment with the lower rate then divide that amount into the closing costs involved in the transaction. If you save $100 per month and closing costs are $2,000, you will recover your closing costs with the lower rate in 20 months. As long as you own the property for at least that long it makes sense to consider a refinance.
You might also refinance an existing manufactured home loan if you want to switch terms from say a 30 year loan to a shorter term, say 25, 20 or even 15 years. A shorter term will have slightly higher payments but over the loan haul you will save on interest paid to the lender and your property will be paid off sooner. And finally, if you have an adjustable rate mortgage and fixed rates are still at relative lows, you should consider getting out of the adjustable rate and into a more stable, fixed rate loan. If any of these situations make sense to you, then it’s time to contact a lender that offers loan programs to refinance a manufactured home.
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