Manufactured Home Loans – Everything you must know

When seeking financing for a manufactured home, it is very important to find an expert that specializes in manufactured home finance. Otherwise you may end up losing your approval in the eleventh hour because the underwriter realizes that they just can’t approve a loan for a manufactured home.

When you apply for manufactured home financing, you will need to address some critical topics regarding your personal finances. For example, if you have had a bankruptcy within 5 years, there are very few lenders that will finance you, so it is important to focus on rebuilding your credit. Just a year ago, a bankruptcy within two years was a deal breaker, but with the financial crisis underway, things have changed.

The age of the manufactured home is very important in getting a mobile home loan. Any mobile home pre-1970 will be very difficult to finance for two reasons. The first is that it is pre-HUD, which means that there were no regulating rules when building the mobile home, and this increases risk. The second factor is that the mobile home is old, so it does not hold very much value.

The third most important factor in getting approval for a Manufactured Home Loan is your credit score. If your credit score is above 700, then it will be easier for you to get financing. If you have a troubled credit score, then you will usually have to come up with a higher down payment on your mobile home purchase.

Another important factor is your income-to-debt ratio, which gives the lender a sense of your reliability to pay them back, with your current financial situation. This ratio takes how much you are obligated to pay out each month (rent, car payment, student loans, mortgage, etc.) and compares it as a ratio to your income.

The last important factor in getting manufactured home financing is the down payment for the mobile home. It is important to the lender that you have the ability to save money because this shows a history of responsibility. The down payment is also a way to manipulate the ratios by way of changing the monthly payment of the loan. Your mobile home mortgage broker or lender will go over all of this with you, so don’t feel as though you must become a mobile home loan expert on your own.

Whether you are looking to finance a mobile home mortgage or a loan for personal property, you will definitely need a mobile home loan expert, or else your interests are left unprotected. If a mobile home has a permanent foundation, you may take out a mortgage to purchase both the home and land. However there are also loans available to finance the purchase of a mobile home only, called a chattel mortgage. The benefit of a mortgage is that the intrest expense is a write-off on a manufactured home loan, while taking a loan out as personal property does not allow for write-offs.

A personal property loan is meant for the purchase of homes on a lot with space rent as in mobile home parks. Personal property financing is offered by retailers who sell manufactured homes. In order to qualify, you need to put down 10 percent of purchase price for 30 year loans. The interest rate will be 2-3% higher than mortgages, fixed or variable. However, you can qualify for a mobile home loan with a higher debt ratio and use the loan funds to cover mobile home costs plus lot improvements.
JD Levens is a credited expert on mobile home financing. He currently works for a mobile home financing firm in California where he has helped hundreds of families finance and refinance their mobile homes.

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