Understanding Manufactured and Mobile Home Loans: Key Insights and Tips
Navigating the world of manufactured and mobile home loans can be complex, especially for first-time buyers. Our recent Zoom class, led by Kathy, a seasoned expert in mobile home financing, provided invaluable insights into the nuances of these loans. Here's a comprehensive overview of the key points discussed during the session.
Differences Between Stick-Built and Mobile Home Loans
While traditional stick-built homes typically come with 30-year loan terms, mobile homes on leased land usually have loan terms ranging from 20 to 25 years. However, if you own the land, a 30-year term is possible.
Down Payments and PMI
Manufactured home loans can start with as little as 5% down, with no PMI and no prepayment penalties. This flexibility makes them an attractive option for many buyers. Even older mobile homes, dating back to 1960, can be financed with a low down payment, provided they are in good condition and located in a desirable park.
Credit Requirements
Credit scores play a crucial role in determining down payment requirements. For instance, scores between 580-599 may require 35% down, while scores between 600-619 might only need 15-20% down. It's essential to check with both the lender and the park management for their specific credit criteria.
Park Approval
Securing approval from the park management is a critical step in the process. This includes understanding the park's rules, regulations, and any specific requirements they may have regarding pets, home maintenance, and other factors.
Financial Documentation
When applying for a loan, you'll need to provide W-2s from the past two years, a recent pay stub, and a bank statement showing all deposits. For retirees or those with alternative income sources, an award letter or similar documentation will be required.
Co-Borrowers and Buy-For Programs
While co-signers are not permitted, co-borrowers who live in the home are allowed. Additionally, buy-for programs enable family members to purchase homes for each other, provided they meet certain conditions.
Appraisals and Closing Costs
Appraisals are mandatory and cost approximately $450 for mobile homes on leased land. For homes where you own the land, the appraisal fee can be up to $750. Closing costs include the down payment, taxes, insurance, and the appraisal fee.
Additional Tips
Always use an escrow company experienced in mobile home transactions.
Ensure you understand the park's rules regarding pets, renovations, and other specifics.
Verify if the park allows rental of the mobile home, as many do not.
Be aware of space rent increases, especially in high-demand areas.
By understanding these key aspects, you can navigate the process of securing a loan for a manufactured or mobile home with greater confidence. For more detailed information, watch the full recording of our Zoom class below:
