Buying a manufactured home today isn’t what it used to be. The image of a metal cabin sitting on top of a parked trailer might be the initial vision of some but today the difference between a manufactured home and a traditional “stick built” home is barely noticeable. In fact, some might even have to be told the home is a manufactured one because at first glance it looks like any other. Yet even though there are cosmetic and construction differences, financing with a mortgage can take a little twist if the lender or bank isn’t familiar with loans used to buy manufactured housing.
When someone visits a manufactured housing dealer they will also be introduced to a lender who specializes in manufactured homes. While this is certainly okay don’t allow yourself to be herded into some sort of “package deal” where you get some sort of a discount if you get the home at the same place you got the loan. Negotiate the price of the home separately and research financing on your own. You might very well use the associated lender but you still need to shop around.
Fannie Mae and Freddie Mac offer loan programs specifically designed for manufactured housing. A loan used to purchase an existing, “stick built” home is not exactly the same as the one for a manufactured home. When contacting lenders, ask if their loans are those underwritten to Fannie Mae or Freddie Mac guidelines. If so, that lender should be on your list. Conventional loans underwritten to Fannie or Freddie standards will have some of the most competitive programs around.
Another excellent source for manufactured home loans are government-backed loans such as FHA, VA or USDA. There are different reasons when considering a conventional or a government-backed primarily based upon eligibility, down payment available and location of the property. Your best option can be discovered with a conversation with an experienced loan officer. As with a conventional loan, ask the lender if the loan is conventional or government-backed. Anyone can apply for an FHA loan but only eligible veterans and others can use a VA loan and the USDA program has income and geographic limitations.
If the loans are not conventional or government then it’s either a private loan or a personal property, or “chattel” loan and if so you can expect slightly higher rates. The advantage with such a loan is the approval process is much easier compared to a conventional or government loan. Is the loan just for the unit or does it include the land where the home will be permanently placed? If you already own the lot your terms for a new manufactured home loan can be more favorable. Finally, what are the terms of the loan? Many loans are for shorter terms such as seven or 10 years. A shorter term loan will mean you’ll have to refinance when the loan term is over. If your term is just five years for example, you’ll be looking for a refinance sooner rather than later.
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