At a certain point, nearly all individuals reach a point where they begin considering purchasing a home.
Whether that is a stick-built or manufactured home is more based on the individuals’ preferences.
If you have reached this point where hard work in years past has paid off, and you are ready to buy a mobile home, you likely have a lot of questions.
Especially for those of you that we would consider first-time home buyers and are just beginning your search for mobile homes for sale.
First-time home buyers are often clueless about the process and how to correctly navigate the purchasing process with a mobile home. You have a lot to consider.
Not only do you want to find the mobile home of your dreams, but you also want to find an ideal mobile home park or mobile home community and achieve the most favorable mobile homes financing terms possible.
You also have other considerations, such as the pros and cons of a single-wide mobile home vs. a double-wide mobile home. Or should you consider building your mobile home as opposed to purchasing used mobile homes for sale.
No worries, all of these details will be covered.
With all the online distractions and companies simply trying to generate leads from individuals like yourself searching for a home or financing, we decided to step in and help you out.
We will make this discussion geared towards providing you everything you need to know about purchasing a mobile home.
We will cover the differences between purchasing a mobile home vs. a traditional home.
We will also discuss what you can expect and how to navigate the financing process, which will include details about loan types, interest rates, and credit scores.
Consider this your ultimate guide to purchasing a mobile home.
Let’s start with some basics before diving into the specifics and more complicated details.
First–Time Mobile Home Buyer
So, you have put in the time and saved up enough for a rainy-day fund and for your down payment to purchase a mobile home.
All that is left now is to find a mobile home to purchase and understand the process.
That is what we want to begin detailing in this discussion.
Let’s start by breaking down the fundamental difference between purchasing a mobile home and a traditional family home.
Mobile homes, compared to traditional mortgages, are relatively similar, for the most part.
In most situations, you will need a down payment and you will want to do some due diligence and research on your end to find the best loans for mobile homes.
Down payment amounts vary based on the lender and your credit score.
In most situations, a down payment will be around 10%-20%, although some financing options may require a minimal down payment or no down payment at all (more on this later).
Buying a mobile home has only become more accessible and streamlined in recent years. Especially with the trend of more individuals purchasing mobile homes and the amount of financing that has become available to individuals considering buying a mobile home.
However, before getting ahead of yourself, you need to understand your options and find your dream mobile home and mobile home community before worrying about financing stipulations or choosing a mobile home lender.
Let’s cover those details first.
Choosing a Mobile Home and Mobile Home Community
Finding your dream mobile home or mobile home community (also known as a mobile home park) is no different than finding your dream traditional single-family house.
Mobile homes now offer luxurious finishes and ample square footage. Some higher-end or upscale mobile home communities are even just as viable and well-put-together as any neighborhood you would purchase a traditional home in.
Using online websites to search for mobile homes in your area can be a great start (see: what is the best website to find a mobile home?). Or you can begin by looking at manufactured home builders (manufacturers) to get an idea of the cost and turnaround time it will take to get you in your dream mobile home. Learn more on how to buy a new manufactured home here.
Do Not Rush the Process; Find a Mobile Home that Meets All Your Needs and Desires
Finding a mobile home that will fit your budget and provide what you need for you and your family is not always an easy task.
Make sure the size is adequate. Look at other details, such as the interior finishes you desire and the yard space or additional amenities you want. It is better to treat purchasing a mobile home as you would buying a traditional one.
Do not rush the process; otherwise, you will find yourself 5-10 years down the road repeating the same process because you ultimately are unhappy with your initial purchase or did not think far enough into the future.
Once you have this part of the process nailed down and feel at ease with your decision, along with having what you want, it is time to start looking at the financing side of the purchase.
This part of the purchase can make or break the financials involved, and it is highly advised to research all options and secure the best financing for your mobile home, with the most beneficial rates.
Mobile Home Loans and Financing Options
When it comes to financing mobile homes, you will find that rates can be relatively similar to traditional mortgage rates, with some exceptions.
Most lenders will try to remain highly competitive to earn your business. The payments typically range based on your down payment and interest rate on loan; and, of course, the actual loan terms can be impacted by credit score, among other factors.
Mobile Lenders are Becoming More Flexible with Terms and Conditions for Financing
Many lenders today will be flexible with individuals that have lower credit scores when purchasing a mobile home.
The modular homes market is booming, so it is no surprise that lenders want to do everything possible to attract potential consumers to work with them during the purchasing process. So, bad credit does not automatically disqualify you from purchasing a mobile home.
However, your financing options may be limited because of other factors, such as debt-to-income ratio.
Let’s start with some of those details and then cover your specific loan options for a mobile home.
How Credit Scores Impact Loan Options and Interest Rates for Mobile Homes
Credit scores are always an impactful factor in the financing process for a mobile home.
Credit scores are directly correlated to the interest rates you are likely to be afforded by any financing option you choose (more on this shortly).
Suppose your credit score is low or considered a higher risk for the mobile home financing provider. In that case, your interest rates will be on the higher side.
Conversely, excellent credit scores will allow you to find the most beneficial mortgage programs with the friendliest interest rates; ultimately providing you with savings in the long run.
Down Payments for Mobile Homes
Now that you understand the impact credit scores can have on financing options for a mobile home, it is essential to understand some of the basics regarding down payments for mobile homes.
Down payments for mobile homes will be like some of the known stipulations consumers face when purchasing a traditional home.
Some programs and lenders may offer down payment assistance. However, most of the time, lenders will require at least 3% down. This means that if your purchase price for a single-wide mobile home was $100,000, you would be required to place at least $3,000 down at the time of purchase. This does not include other fees at the time, that could consist of items such as leased land or other fees tacked on by the mortgage company.
It is essential to weigh your options and do your research before choosing a lender. Some credit unions or financing offers may be more beneficial for your mobile home loan, given your specific circumstances.
Chattel Loans for Mobile Homes
Chattel loans are another option you can consider for financing a mobile home.
Chattel loans are loans specifically designed for manufactured homes or other moveable pieces of personal property. Other common uses for chattel loans include boats and machinery.
Chattel loans for manufactured homes are not always known to offer the best terms regarding interest rates, loan durations, or down payments required. Still, they can often be a viable option when traditional mortgage programs do not fit your needs.
FHA Loans for Modular Homes
FHA Loans is a government-backed loan program and is often thought of as one of the most popular mortgage programs to gain financing.
In recent years, the ability to gain FHA financing for a mobile home has become more accessible. If you check a few boxes, FHA loans are 100% possible for a mobile home.
First and foremost, to qualify for an FHA loan on a mobile home, the mobile home must be considered your primary residence. You also need to understand that FHA loans are offered in two primary types: Title I and Title II loans. See: Can you buy a mobile home with a FHA loan? for more details.
FHA loans can be highly desirable for mobile homes due to the terms you can get. FHA loans on mobiles can be offered for 20 years or more, which ultimately helps lower your overall monthly payment.
Additionally, many consumers like to lean towards FHA loans because of the lower fixed interest rates available, ultimately saving you money over the loan terms.
FHA loans do have some stipulations you need to understand when it comes to loan durations and what is required from the borrower when purchasing a lot vs. leasing a lot.
It is advised that if you are considering an FHA loan, do your research and work with a professional who can break down your options.
VA Loans Remain an Option
VA loans are another option for individuals purchasing a traditional family home.
When purchasing a mobile home, it gets a bit more challenging to use a VA loan as an option, but it is still possible.
VA loans require that the home is built and meets the HUD Code for mobile homes set by the U.S. Department of Housing and Urban Development (HUD).
You also must have the home permanently affixed to the foundation, and the home must have at least 700 square feet of interior floor space.
VA loans are a bit tricky, but they can be accomplished. This is another situation where it is best to work with a professional who can help you through the requirements needed to gain financing using a VA loan for a mobile home. For more details, see: Can you buy a mobile home with a VA loan?
A Conventional Loan is Not Typically an Option with Mobile Homes
Conventional loans for mobile homes are not typically possible because the structure needs to be considered real property to gain this type of financing.
Personal Loans as an Option to Purchase a Mobile Home
Personal loans could be an option for a mobile home, but it is typically not advised.
Compared to other financing options, personal loans will have the shortest terms and often won’t be able to provide the amount of cash needed to purchase a mobile home.
Personal loans will also carry the highest interest rates compared to other options we have covered thus far in the discussion.
The Takeaway: The Process Involves Work, but Purchasing a Mobile Home Has Never Been Easier
This discussion covered a great deal about the process of buying a mobile home and the options you will encounter. Every part of the discussion is essential to understand and important to consider. Overall, these are the two most crucial points:
● Money can be saved by securing the best financing
● Time and effort can be saved by finding your dream mobile home now instead of later
Purchasing a mobile home is exciting, but, after today’s discussion, there is a lot to consider and understand about the process.
Therefore, it is always imperative to work with a professional and take your time deciding which financing option is best.
Not only do you need to make sure you get the best financing for your mobile home, but you also want to make sure you purchase the mobile home you desire.