Financing A Manufactured Or Modular Home
If you are in the market to purchase a new home, a manufactured home can be a cost-effective option. These homes are prefabricated, built in a factory, and then moved to a site. Manufactured homes are increasing in popularity and are often cheaper than site built homes. It is a cost-effective approach whether you are buying brand new or purchasing a resale property, but there are a few things you should know about manufactured home financing.
Like many homebuyers, you probably do not have cash to purchase a property outright, so you will need to apply for financing. However, it is not always easy to find mortgage financing for a manufactured home. Usually the retailer refers the customer to a financial institution or a loan broker representing a bank or credit union. Most financial institutions that finance new manufactured homes have similar “one size fits all” guidelines with little flexibility in terms, conditions, and rates. Credit unions are an often-underused alternative and could well be the easiest and least expensive option.
Some banks do not offer traditional financing for manufactured homes.
Traditional Financing Isn’t Always an Option
Some manufactured homes are one-level and look similar to site built ranch homes. These properties are built in accordance with standards set by HUD, so you are getting a property that is safe for you and your family. However, despite manufactured homes providing a secure dwelling, some banks do not offer mortgage financing for these types of homes, or they will only offer traditional financing under certain conditions. Manufactured homes legally installed and permanently attached to property owned by the homeowner are considered “real property” and in most instances, eligible for conventional real estate mortgage financing.
With a site built home, buyers finance both the house and the land. This is not necessarily the case with a manufactured home. A bank may offer traditional mortgage financing for a manufactured home if you need funds to purchase both the home and the land. However, if you are renting the lot and only need financing for the home, your only option may be a chattel loan, which is a personal property loan that can be used to purchase a manufactured home.
Credit Unions Can Help
If you prefer a traditional loan and your personal bank does not offer financing, you may have better luck working with a small mortgage company or a credit union. New manufactured homes financed with a credit union mortgage are generally less expensive than comparable loans with banks and other mortgage originators. Another option is securing financing through a manufactured home sales dealer.
Manufactured Home Loans Have Shorter Terms
While it is unusual to finance a site built home for up to 30 years, manufactured homes may have shorter terms, depending on whether it is titled as real estate property. If you are financing both the home and the land and you receive a traditional loan, you can take advantage of a traditional 30-year term. However, if you have a chattel loan, the typical repayment period is 15 to 20 years.
Getting a New Manufactured or Modular Home Can Be Exciting
Financing a manufactured home can be slightly different from financing a site built home. Make sure you know your options & speak with an experienced mortgage professional today to see if there is an option available for you!
Robins Financial Mortgage Loans offer quick closings and competitive rates. You can apply for a mortgage loan online or set up your appointment to speak with one of our Mortgage Loan Officers. The mortgage team at Robins Financial Credit Union is ready to help you on your way to your dream home!