Financing Your Manufactured Home
|High-quality homes are built in factories for roughly half the cost of constructing a house on a lot. The purchase price, however, is not the only factor in determining affordability. It is important to shop for a loan as carefully as you shop for your home. The size of the down payment, interest rates, length of the loan, and loan qualification requirements are all factors to be considered.
Personal Property Loans
A manufactured home purchased separately from its lot is financed as personal property. Buyers who locate their homes in land/lease communities or “parks” use personal property loans. Generally, they require a 10 to 20 percent down payment and are financed over 10 to 25 years. Interest rates usually are a few percentage points higher than those for real property loans and can be either fixed or variable.
The loan can cover both the cost of the house and of lot improvement such as walkways, porches, carports, garages, and other development costs.
Real Property Loans
Homes purchased as a package with land are considered real property and are financed with the same kind of long-term mortgage as site-built homes. These loans are available only for permanently located houses.
Land/home packages, as these loans are often called, come in a variety of forms. Depending on the lender, they can be virtually identical to conventional home loans with 30 year mortgages and competitive interest rates. Often lenders have several programs to choose from that offer fixed or variable rates, a variety of terms (lengths), and other options.
In some cases, land/home packages for new homes are modeled after multi-disbursement construction loans. These loans allow the buyer to pay the land seller, home dealer, and various contractors at various steps in the purchase and development process. If the land/home package is not a multi-disbursement loan, funds may not be available to pay the land seller and contractors until the project is complete. It is not unusual for these parties to wait several months for their money.
Finding the Right Lender
You can save frustration and costly delays by finding the right lender and loan officer. Look for someone with experience in manufactured housing loans. He or she should be someone you feel comfortable with, someone who listens as well as explains.
A good way to start looking for lenders is to ask local manufactured housing retailers for recommendations. They generally have relationships with several lenders. However, you do not have to go with the lender your retailer suggests. Comparison-shop. Some lenders have higher fees. Some limit the amount of money they lend on manufactured homes, or they don’t lend on packages where land has a greater value than the house. Don’t be afraid to ask questions.