If you own a manufactured home, or if you are looking to purchase one, here is what you need to know when it comes to mortgage loan financing:
Manufactured homes are not the same thing as modular homes. Manufactured homes are constructed, purchased at a dealer, and then moved to their final destination where they are permanently attached to the earth. If you’re looking to purchase a manufactured home, many lenders will deny you because it is a risky financing vehicle. This is due to the fact that technically you could detach the dwelling and move it to another property. Manufactured home loans are traditionally more difficult to come by in terms of financing and often contain higher rates and fees due to the associated risk that comes with this type of property. Some lenders will you allow for you to secure financing for a manufactured home without the need for mortgage insurance; meaning avoiding an FHA mortgage. FHA mortgages do contain a monthly mortgage insurance payment and can end up costing you more, but could be an option for you if there are less than perfect alternatives.
To get a Conventional mortgage without mortgage insurance, you need to have at least 20% equity and have a credit score of 640 or more. It can be used for purchasing or refinancing without pulling cash out. The property has to have the HUD plates representing the property is a manufactured home. The property also must be a double wide and has to be a Delta after the year 1978. If you are looking to purchase a manufactured home for the first time, Conventional mortgages will allow you to do that type of financing so long as you find a property with the real estate included. In other words, the house is already affixed to the earth and is being sold as real estate. Financing to secure the land and attach the unit is an entirely different animal that typically comes with higher rates and fees. These loans are more difficult to come by. If you are looking to get a manufactured home, get pre-qualified to purchase a house with the expectation that the manufactured home is already attached to the real estate and is going to be sold as one property. This will give you the best outcome for success in this particular type of property arena.
Another outlet for this type of financing is FHA. FHA contains two forms of mortgage insurance; an upfront mortgage insurance fee and a monthly mortgage insurance payment that is otherwise avoided when you go with a conventional mortgage. No matter what your financial situation is, look at getting qualified for both types of financing. It is helpful to know that if you can use conventional financing and avoid PMI you will have an easier time handling the payment. The payment will be lower which can increase your buying power while you remain under the 20% equity margins.
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