How To Finance a Manufactured Home
Written By: Plattsburgh Mortgage Team: Manufactured Housing
If you have applied for a mortgage to buy a manufactured home you might be a little discouraged. It is easy to feel that banks simply do not want to lend money on manufactured housing. This complete guide on how to buy a manufactured home will walk you through it.
Manufactured housing has a few more requirements and ight take a little more time to close on your new home but the reqard is worth the process.
What is a Manufactured Home
Manufactured homes are homes that are prefabricated in factories and delivered to the home site for assembly. Manufactured homes have strict construction requirements to insure a safe structure for your family. A manufactured home is built on a steel chassis with wheels attached and a DMV title is provided to verify ownership similar to a vehicle.
Why Banks Do Not Want to Lend on Manufactured Housing
Because aanufactured home (doublewide) is titled by the dmv, most mortgage companies do not consider them real property and therefore will not provide a home loan for the purchase. There are ways around this problem but it takes an experienced manufactured home lender that knows the ins and outs of the business.
How to Finance a Manufactured Home
First, the property needs to be permanently fixed to the foundation and the foundation must meet local building codes. In colder regions, the concrete slab must have footers below the frostline. When you borrow money to purchase a manufactured home youust prove that the home is permanent by obtaining an engineers certification. The certification will show that the home’s wheels have been removed, the home is permanently strapped down to the slab, and that any additions meet local building code. The engineer certification is an extra cost to the buyer and results in manufactured homes having slightly higher closing costs than a standard constructed home.
In addition to proving the home is permanently fixed to the slab, the home must be in it’s original location. A manufactured home cannot be moved to a new location and purchased with a mortgage. The reason for this is, mortgage companies lend on real estate. In the event of a foreclosure banks want to insure the home cannot be moved. Interest rates for home loans are typically lower than cars because of the security k owing the property cannot be moved. When someone defaults on a car, the vehicle can sometimes be difficult to find which is why a car loan is a more risky proposition for a bank.
Second, the HUD tags and plates need to be verified to purchase a manufactured home. The HUD tags is a metal tag affixed to the exterior of each section of the manufactured home. The HUD plate is a paper document typically attached the the wall in the utility closet. These tags provide serial numbers, the standard to which the home was built, and the insulation standard used to build the home. If the tag or plates are missing from the home, they can be ordered through IBTS. This is typically an extra cost assumed by the buyer when they purchase a manufactured home.
Understanding these initial requirements will help you understand how to buy a manufactured home and which homes might not qualify at all. If you are working with an experienced manufactured home lender, they should be able to walk you through this process and help you determine which homes are eligible for financing.
Do I Need a Down Payment to Buy a Manufactured Home
Sometimes. Once you have jumped over the hurdles of proving the property is fixed to the foundation and the structure was built to HUD code, the home is eligible for all of the typical loan programs available. If you are a veteran, you can purchase the manufactured home with a VA loan. A VA loan does not require a down payment and offers some of the lowest interest rates in the mortgage lending industry. In addition, VA loans do not require monthly mortgage insurance so you can count on receiving the lowest monthly payment possible. If you are not a veteran and do not qualify for a VA home loan you still have some options available to you. FHA is another loan program that provides financing from manufactured homes. FHA only requires a down payment of 3.5%. in addition FHA protects its home buyers by offering some of the lowest interest rates in the industry. FHA is the most popular program used to purchase a manufactured home. USDA and conventional loans are also available to purchase manufactured housing. Conventional loans typically require a larger down payment and better credit scores. USDA is a loan program that offers 100% financing in rural areas. USDA home loans are backed by the department of agriculture and offer financing with flexible credit requirements.
How long does it take to close a manufactured home loan
manufactured home loans can take a long Lowe’s because of the extra paperwork and property requirements. Typically manufactured homes take 3 weeks longer to close then a standard built property. Although the process can be more complex you can still see great rewards if you decide to buy a manufactured home. When you close on your manufactured home the title company or attorney will relinquish the DMV title and convert your home to real property.
What credit score do I need to get a manufactured home loan
The minimum credit score to obtain a manufactured home loan is currently 580. With a 580 credit score you can qualify for FHA financing and get a reasonable loan term. in some cases it might be better to try and improve your credit score so that you can get a load that are monthly payment. if your credit score is 620 or greater you can qualify for all of the available loan programs including a conventional loan VA loan USDA loan and FHA loan.
If you want to know what your credit score is visit creditkarma.com and check your credit profile. credit karma uses scores that are quite different than what most mortgage companies will use however they can be helpful in seeing where you stand and if your credit score might need some improvement. It’s a great place to start and prepare yourself for home-ownership. read the home buyer guide and learn the other steps you should take to prepare to buy a new home.
Should you buy a manufactured home
This question has been debated among mortgage professionals and real estate agents for years. some believe that manufactured homes are not as good and investment as standard built construction. typically manufactured homes do not increase in value at the same rate of stick built homes. in addition it manufactured home can be more difficult to sell because of all the reasons we stated regarding the financing requirements. There are many positives to buy manufactured homes too. they are more affordable for lower income families and they can be customized and built quickly. if you are thinking about building a manufactured home make sure to talk to other people that have worked with your manufactured home dealer. find out if they are capable of constructing the home or if they just sell the units.
If you if you are looking for a lender to purchase a manufactured home we offer financing in all 50 states and are licensed to provide FHA VA USDA and conventional loans. In addition we provide great credit counseling services to help borrowers manage their credit and give them tips to improve their credit score.
As of October 10th, 2019 our FHA interest rate for manufactured homes is 4%
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Summary
Article Name
How to Finance a Manufactured Home
Description
Buying and financing a manufactured home requires some extra steps. Some banks will not finance a manufactured home because of the added complexity. If you have been been rejected with other lenders, keep reading. Learn the steps to take to purchase a manufactured home.
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Bank of England Mortgage
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