Hey guys, Jason Sharon here with the Home Loans Inc. I'm a local mortgage broker in Charleston, South Carolina. Here to talk to you about the three reasons why manufactured homes are more difficult to finance. So before we get into the three reasons, let's talk about manufactured home versus modern home versus mobile home. A manufactured home, and a mobile home are the same exact thing. Show
Need a Second Opinion? Click Here for Help! Some people call one thing, some people call it the other. Manufactured and mobile homes are the exact same thing. They're built in a factory, wheels put on them, registered with the department motor vehicles. And then towed to the location, set up on land, reassembled. You know, if it's double-wide time is taken off. That's a manufactured home or mobile home. A modular home is built in a factory in sections. So maybe the master suite will be one section, maybe the living room will be one section, maybe that kitchen and dining will be one section. And then those are put on trucks and shipped to location that assembled almost like playing Tetris. That's modular home. This video does not apply to modular homes. Modular homes are treated just like a traditional stick-built home. So now you're buying a manufactured home because you found it and that's what you want. Nothing wrong with that whatsoever. Here's what you could run into trouble with. First is that transaction is going to be more costly. The closing costs are higher because you have to have an extra engineered inspection. The insurance is going to be a lot higher for a manufactured home than a traditional stick-built home because it's just a more risky piece of collateral and more likely to get damaged during a storm or a hurricane or tornado. And then the third reason why it'd be more expensive is interest rates are higher on those type of loans because they are considered a riskier product. So a lot of lenders that do them will have a higher interest rate for you by a manufacturer versus a traditional stick-built home. The next problem that you may run into is the collateral. The home has to qualify, and there's a slew of reasons why it could possibly fail. First, that engineered inspection has to meet certain requirements. The property has to have the right tie downs, the right footers, the square foot be on a permanent foundation, wheels removed. It has to have the HUD label plates that are missing a lot of times, there's a way to get a replacement, if you need to. The other part that would make the mobile home more difficult to finance is that it has to be de-registered the title from the department of motor vehicles and registered with the county as real property. And a lot of times that has been done whenever the person that's selling to you. So the third part of what could make it more difficult is that a lot of lenders have what's called overlays and you probably call it red tape. We have an industry called overlays, and that's where they're more restrictive on a loan type based on their personal choices as a lending institution. So let's say their typical minimum credit score it might be 580, but for a mobile home, they might not go below 640. They may require additional money saved in the bank as a compensating factor. Or they've just may have lower debt ratio limits. So there's different red tape that many lenders implement to try to make it more difficult for those types of loans. So hopefully that helps you out. If you have any questions, reach out to one of us here at the Find My Way Home network. We're happy to talk you through how a manufactured mobile home loan works. Have Mortgage Questions? We Can Help! Click Here Ask Me Your Mortgage Questions Here
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Why do banks not like manufactured homes?Some lenders do not finance the purchase of manufactured homes because the land on which they sit is generally rented, and the home itself can be moved. Thus, it is not considered real property.
What type of loan is best for a manufactured home?Chattel loans
Even if you don't own the land on which your home will be located, you might be able to secure financing with a chattel loan. As a result, they are a popular loan option for buyers who plan to rent a lot in a manufactured home community.
Why do lenders not finance manufactured homes?Why are Loans for Manufactured Homes so Difficult to Find? When it comes to financing a manufactured home, some lenders tend to shy away from these popular structures. This is due to the fact that some manufactured homes may age more quickly than their site-built counterparts.
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Is it easier to get a loan for a manufactured home?
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