Whether you’re buying a manufactured home or mobile home for the first time, or getting ready to move into your dream home, most likely you’ve already begun thinking about how to finance your new home purchase. With the number of options available for mobile home loans, and a slew of lenders to choose from, it may seem daunting at first to wade through the financial logistics of your manufactured home search.
Here, we break down the anatomy of manufactured home lenders and the different types of loans they offer – as well as how to determine which loan and lender may be right for you.
Manufactured Home Loan Anatomy
Before we get into the different types of manufactured home loans a lender might recommend, it’s important to remember that not all home loans and home loan programs apply to manufactured housing. So, if you have your eye on a specific type of home loan, make sure that loan will cover all home types, including manufactured homes.
If you’re working with a lender to secure a manufactured home loan, you’ll likely come across one of these loans:
Chattel loans are by far the most common type of loan you’ll come across as a manufactured home buyer. They’re primarily offered when a home buyer seeks to purchase the home as personal property, similar to a car loan. While this can be advantageous for homeowners looking to use the home as collateral for the loan itself, they may come with higher interest rates. These loans may also be the most common type when buying a manufactured home in a park.
Some homeowners may qualify for home loans that are applicable to manufactured housing offered by the U.S. government. For example, the U.S. Department of Housing and Urban Development (HUD) offers loans geared towards low-income homebuyers, making manufactured housing even more accessible and affordable.
There are some criteria that homeowners must meet to qualify for a HUD loan, as well as some pricing and term limitations to keep in mind. Still, a government loan such as the HUD manufactured home loans may be the best option for many.
The Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) will also offer manufactured home loans, but only if the home is considered “real property.” This requires the home to live on a permanent foundation, and for the title of the home to be discontinued so the structure of the home, as well as the land, can be written into the deed. These loans are typically more strict in their requirements than HUD loans.
HUD isn’t the only governmental manufactured home loan to explore, however. There are other options to look into from Fannie Mae and Freddie Mac, along with the U.S. Department of Agriculture, among other affordable housing programs.
At the end of the day, you may still look at a good old-fashioned conventional mortgage loan for your manufactured home purchase. However, not every mortgage company will service loans for manufactured homes, and may even turn prospective home buyers away.
Your lender should be able to advise you on whether a conventional mortgage is available in your area for your manufactured home. While these types of loans are not as common for manufactured homes, they may still be worth considering if they’re available to you.
Typically, you’ll only be able to secure a conventional mortgage if you are purchasing or already own the land that the home will sit on. Often referred to as a “land-home mortgage,” these mortgages are similar to what would be offered for site-built homes by offering financing for both the land and the home itself in one package.
Where Can I Find a Lender?
Believe it or not, the first place to look when it comes to looking for a lender to process your manufactured home loan is your friends and family. Take time at your next family gathering or friendly outing to see who can point you towards a lender they may have used in the past. A family or friend referral is a great way to connect with a lender, and gives both you and the lender some familiar ground to work with should you choose them for your manufactured home loan.
If you are looking to purchase a manufactured home in a park or community, they may be able to provide lending options for you to work with, should you choose to work with them. This will vary between communities, so be sure to check with that park beforehand to see what resources they have on hand.
Additionally, many manufactured home dealers may also offer lending services. MHVillage offers a search function for manufactured home dealers, so if you’re using a dealer to help with your manufactured home search, it may be worth exploring dealers that also offer loans for a more “all-in-one” approach.
Many retailers will also provide you with options of lenders they trust for you to work with. These retailers often can help out with the loan application process, too.
How Should I Start the Loan Process?
Once you’ve identified a lender, you’ll usually be asked to either fill out an application, often online, and provide a handful of documents to verify you qualify for the loan. These will usually include bank statements, recent pay stubs, tax returns, and other documents that prove you’re in acceptable financial standing.
From there, your lender will guide you through the financing process and the exact paperwork, which may differ from loan to loan. For instance, a land-home loan may involve more up-front documentation than a chattel loan.
How Will I Know Which Lender is Right For Me?
Ultimately, you’ll want to choose a lender that best fits your individual needs and who you feel comfortable working with. Here are a few criteria that will help you make that decision:
The Right Loan
Not all manufactured home lenders will offer every kind of manufactured home loan on the market. Before you commit to a lender, make sure that they can offer a specific type of manufactured home loan that is right for you – particularly if there’s one type of loan you have in mind. Being clear in what you intend to purchase, as well as whether you intend to own the land under the home, should lead you to the correct loan and lender needed to make the purchase.
However, don’t panic if you don’t know what type of loan you want from the very beginning of the process. The right lender will pair you and your financial makeup with the right type of loan that’s best suited to your specific home buying experience.
The Right Convenience
Manufactured home lenders, like all home lenders, should be flexible and available throughout the entire home buying process. If you’re struggling to work with a lender that hasn’t returned your calls in weeks, it may be time to find a different lender. The right lender should be communicative and proactive throughout the entire process.
The Right Match
Ultimately, you and your lender should see eye-to-eye on your best interests for securing a manufactured home loan. Your lender should take time to fully understand you, your needs, and your financial situation to recommend the best loan for you.
No matter where your lender search takes you, trust MHVillage with your manufactured home search. MHVillage, the nation’s leading website for buying and selling manufactured homes, offers the most in-depth search options when searching for manufactured homes in your area, enabling you to find the home of your dreams with MHVillage. And, with various manufactured homes listed in your area, you may find additional options for financing your manufactured home purchase right there on the home listing.