Can I Get a Loan on My Mobile Home Title?

Can I Get a Loan on My Mobile Home Title?

Buying a mobile home has been a popular alternative to a traditional home since the mid-90s. They were initially designed as temporary stays for those who come to work or travel. However, the demand grew as the market realized it was a quick and affordable way into real estate.

Now, modern mobile homes are equipped with state-of-the-art appliances, energy-efficient fixtures, and the ability to fully customize the space as your own – even being able to double or triple the standard size. This makes it all the more appealing to those looking to purchase a home at a more affordable price point.

Despite this development, there remains to be a limited number of options to finance a mobile home. Because of this, today we tackle the question “Can I Get A Loan on My Mobile Home Title”?

Understanding Mobile Home Loans

Understanding Mobile Home Loans

When seeking a manufactured home loan, you must first assess if the property is eligible and what factors it may possess that make it harder to get your loan for a manufactured home approved.

Types of Mobile Homes Eligible for Loans

One of the most important factors of eligibility is whether or not your home was built before or after June 15, 1976. This date is significant since it was when the HUD (Department of Housing and Urban Development) implemented safety standards for all mobile homes moving forward. Those built after this date and adhering to modern standards are formally known as “manufactured homes”.

If your home was constructed prior to the HUD code, and especially if there have been no renovations or proper maintenance done, there is little chance of your loan getting approved.

Factors Affecting Mobile Home Loan Approval

Five main factors could affect the approval of loans for manufactured homes.

  • Whether or not your home adhered to the HUD code.
  • Your credit score must reach a certain number to be considered and this figure varies per lender.
  • Your employment status and income stability give your lenders an idea of how likely you are to pay your loan back,
  • Whether or not you can provide the downpayment required to finance your home.
  • The type of loan you need can also affect approval since some lenders may require financing for both the manufactured home and the land it sits on.

Bonus factor: Some lenders may require your manufactured home to sit on a permanent foundation, thus turning it into real property.

Financing Options for Mobile Homes

Financing Options for Mobile Homes

Lenders often don’t want to finance manufactured homes because these properties are generally low-cost and depreciate faster. However, while the choices are limited, loan options for mobile homes exist.

Exploring The 6 Main Mobile Home Financing Options

  • FHA Title Loans – Federal Housing Administration Loans come in two programs:
  • Fannie Mae – This mortgage option is open to those who meet certain construction, design, and energy-efficient standards. The home must also have its own driveway connecting to the sidewalk.
  • Freddie Mac – Their Home Possible program provides conventional loans and credit flexibility for qualified buyers. Moreover, the manufactured home must be anchored on a permanent foundation with the wheels, axles, and towing hitches removed, and meet certain size requirements.
  • VA Loans – The Department of Veteran Affairs insures a VA loan for a manufactured home, and these are exclusively available for those within the military community.
  • Chattel Loans – These loans are structured to finance expensive vehicles, and for as long as they are not affixed to a permanent foundation, manufactured homes can be considered under this category.
  • Personal Loans – Personal loans have the least restrictions on what you purchase, even forgoing the need for collateral. The downside is that they come with higher interest rates.

Comparing Loan Programs for Mobile Homes

With types of loan programs above each have their advantages and disadvantages, depending on the kind of financing you need and the loan terms you have the capacity for. Below are the factors to consider when comparing loan programs for mobile homes:

  • Interest rate and annual percentage rate
  • Breakdown of monthly payments
  • Maximum loan amount
  • Total loan term
  • Closing costs
  • Minimum credit score required
  • Lender fees, if any
  • Miscellaneous fees
  • Option for extra repayments
  • Funding time
  • Downpayment required
  • Mortgage Insurance

Applying for a Mobile Home Loan

Applying for a Mobile Home Loan

The requirements may vary depending on which lender you opt for. However, applying for a mobile home loan generally necessitates the following steps:

Step 1: Determine if you need a loan to purchase a mobile home, land to put a mobile home on, or both. This step is also where you determine whether or not you want to live in a mobile home community.

Step 2: Assess your finances, establish your budget, and verify exactly how much you’ll need to borrow in order to finance the purchase.

Step 3: Check your credit report as this will give you a better idea as to the loan terms and interest rates you are likely to get.

Step 4: Research lenders that offer mobile home loan programs you and your property are eligible for. Weigh out the pros and cons. Those with low income or who are purchasing for the first time may look into FHA loans or USDA loans for those in rural areas.

Step 5: Get prequalified for your top choices in order to gain more negotiating power over other offers.

Step 6: Once you determine the lender who best fits your needs, gather the list of requirements and submit an application.

Credit Score Requirements for Mobile Home Loans

Credit Score Requirements for Mobile Home Loans

A credit score helps lenders assess how likely an individual can pay back their loan. This number is calculated based on many financial factors, including the level of debt, credit history, and more. The total can add up anywhere between 300 to 850 and the minimum figure required to get approved for a loan heavily varies on the lender.

Importance of Credit Scores in Mobile Home Financing

Credit scores can heavily impact the terms you are offered for a loan. For instance, those with higher credit scores are more likely to get their applications approved, get offered lower down payment rates and interest rates, and also be granted better loan terms. This is because your credit score helps establish trust from your lenders, giving you more wiggle room when securing a loan.

Improving Your Credit Score for Better Loan Terms

The first step to improving your credit score is knowing where you stand. You can get a copy of your credit report from major national credit bureaus to assess what areas you can work on.

Next, you can improve your score by:

  • Getting a better hold on your bills by avoiding late payments. This impacts 35% of your total score.
  • Maximize your credit limit ratio by paying your card in full every month. This impacts 30% of your total score.
  • Limit frequent requests for new credit as this can impact 10% of your total score.
  • Maintain your old accounts to boost your age-of-credit percentage, which can impact 15% of your total score.
  • Keep track of your progress.

FAQs

Can a mobile home be used as collateral for a loan?

Only manufactured homes built on permanent foundations may be used as collateral for a loan.

What is the oldest mobile home that can be financed?

Only manufactured homes that are built after June 15, 1976, and adhere to the HUD code can be financed.

Will an FHA loan cover a manufactured home?

Yes, FHA loans cover manufactured homes.

What is considered a permanent foundation for a mobile home?

A permanent foundation for a mobile home includes a basement, crawl space, runner foundations, or a slab with block skirting.

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