Mobile homes are one of the fastest growing housing choices as they provide many advantages for those who are on limited budgets and can’t afford to purchase a traditional brick and mortar home. As new designs and building advances are made, manufactured and mobile homes no longer look as they did in the 60s or 70s. Today’s mobile homes look amazingly similar to brick and mortar homes and are in high demand, making the need for mobile home loans an important aspect of financing. Though there are many similarities to mobile and brick and mortar homes, there are also many noticeable differences. The first main difference may be seen in financing terms.
Mobile home loans often have higher interest rates than what you would find with a conventional or brick and mortar mortgage. There are financing options for mobile home loans that are applicable for those with poor and good credit. Those with bad credit who need financing may find that mobile home loans provide them with more options than they would have with a conventional loan. It is recommended to choose financing for mobile home loans from a lender that specializes in this type of financing, as it is different from traditional mortgages.
The main difference between mobile home loans and conventional mortgages is that mobile homes depreciate rather than appreciate. Appreciation is to increase in value over a period of time and with traditional housing, lenders know that with the right environment and home improvements, the value of the home will increase. Mobile homes, no matter how many improvements are made will most likely depreciate, this eliminates the need for many mortgage options in manufactured homes as compared to traditional brick and mortar structures. There are, however, certain situations where a mobile home is located in an area with extremely high property values, the homes may appreciate.
Those considering mobile home loans can consider private and FHA loans. FHA loans are often referred to as Title I loans and these can be used to buy a mobile home, a lot or both a mobile home and a lot. Title 1 loans have a maximum amount so make certain that you understand how much you are approved for before selecting a home and lot package. As there are different requirements for manufactured home loans, you’ll find that the length or term for mobile home loans are shorter than conventional loans. Many Title 1 loans are available with a maximum 20 year term. Because these loans are for a shorter period of time and the homes depreciate rather than appreciate, interest rates are fixed. You cannot find financing with flexible or various interest rates as all mobile home loans have fixed rate mortgages.
Additionally, mobile home loan lenders want to recover their loan as quickly as possible and will readily accept the payment in full at any time. Borrowers will not face prepayment penalties should they pay off their mortgage early. There are various types of mobile home loans available to choose from and it is imperative to take the time needed to read through the fine print to ensure there are no hidden or surprise fees that have been included with your closing costs.
Just as with other loans, it is imperative that those seeking financing for mobile homes take the time to shop around and compare different loans, fees, closing costs and terms. Remember that if you are selecting a mobile home that is located within an established community, you don’t need to choose the financing offered through the community salesperson. You still have the freedom to compare different rates and find your own financing.
When choosing mobile home loans, make sure that you understand what is included in the mobile home’s terms of services. Manufactured homes come with various warranties. You’ll need to know who will be responsible for any damages or defects associated with your mobile home at the time of purchase and installation.
Those who own property and place a mobile home on their land should inquire about having their mobile home titled as personal property. This means that you will be required to pay real estate taxes, however, these are tax deductible.
Choose mobile home loans carefully to ensure you get the house you need at the best price you can afford.