Mobile Home Finance - Everything You Must Know
Jesse D Evans
October 15, 2009
When you apply for a mobile home loan, you will need to address some very important 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 mobile home is very important in getting a mobile home loan. Any mobile home built before 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 financing a Manufactured Home Loan is your credit score. If your credit score is above 700, then it will be easier for you to get approved for a loan. 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, considering your current finances. This ratio takes your monthly obgligations (rent, car payment, student loans, mortgage, etc.) and compares it as a ratio to your income.
The final 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 that they are responsible. The down payment is also a way to manipulate the ratios by way of changing the monthly payment of the loan. Your mobile home loan 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 chattel mortgage or financing 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 property. However there are also loans available to buy 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 rented lot as in mobile home parks. Personal property financing is offered by retailers who sell mobile homes. In order to get approved, 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 mobile home financing with a higher debt ratio and use the loan funds to cover the mobile home purchase plus lot improvements.