There are many more people than ever before who are looking to purchase a mobile, or manufactured, home. A mobile home offers the best in both luxury and excitement, and lenders are now offering far more competitive terms and interest rates on these types of loans. A mobile home can be used as your primary residence, a vacation home, or even an investment property. In fact, owning a property that is considered portable is not much different, in terms of mortgage loan terms and conditions, to that of a normal property.
However what do you do if you are looking to purchase a mobile home, but have bad credit?
It must be said that your chances of approval for a bad credit mobile home loan will very much depend on certain underwriting criteria, although a mobile home loan is typically easier to qualify for than a loan on a conventional property, and this is especially true for a home that is not permanently affixed to land. These specific types of mobile homes are not actually considered real estate, and therefore they do not follow the usual rules that are applied to real estate.
There are two main types of mobile home and these are:
Portable – This is a home that will go everywhere with you, and so when it’s time to move on, you can take your home with you. This type of property is typically far less expensive that a traditional house and you will generally find that your credit rating will not be much of an issue if you wish to purchase a portable mobile home.
Permanently Affixed – As the name suggests, this type of property will stay exactly where it is for many years to come. You should be aware that if a mobile home is permanently affixed to a piece of land, it will be regarded in exactly the same way as normal real estate. You will, therefore, need to abide by the laws that are set out for traditional real estate, although you should find that the price of this type of property is still far cheaper.
Can you purchase a mobile home and the land on which it sits?
A mobile home will usually sit on a mobile home lot, and you have the opportunity to simply purchase the mobile home itself, or the home and the land that it’s on. This is something you should discuss with your lender, although I guess your decision will very much depend on the terms that are offered when you have bad credit.
Another factor it is important to know is that mobile homes will depreciate a lot faster in value than traditional property. So, if you are looking to eventually sell your home, you shouldn’t expect a great deal of profit. However, this probably isn’t particularly relevant, unless you are looking to purchase a number of mobile homes as a possible investment/business venture.
A bad credit mobile home loan can be spread over a period of fifteen to thirty years, and you can take out either a fixed or adjustable-rate mortgage. A lender may be more willing to offer you a fixed-rate if you have a history of bad credit, as this is the ideal way for a consumer to budget for a regularly monthly mortgage payment. That being said, this is very much a personal decision between you and your lender.
At least with a fixed-rate mobile home loan you know exactly what you mortgage payment will be on a monthly basis, so there are no surprises that can come back to haunt you at a future date. Unfortunately, this is how many people end up in a position of having bad credit, as they are financially exposed because they been unable to budget correctly.
An adjustable-rate mortgage is likely to offer lower initial monthly mortgage payments, however, this payment can fluctuate up or down at any time if interest rates change in general. So, in this situation you may end up with an even lower mortgage payment, but you should also be prepared for your payment to increase at any given moment.
The interest rates and terms offered for a bad credit mobile home loan will be determined by a number of variables, which include your debt-to-income ratio, your credit score, the amount of down payment you have available and numerous other factors. In order to secure the best deal it is advisable that you shop around between at least 3 or 4 lenders, and choose the one who offers you best overall value for money over the coming years.