Manufactured homes cost significantly less than traditional homes. Because of this, qualifying for a loan also becomes much easier, helping you achieve your dream of becoming a homeowner sooner than you think!
Below, we tackle how much you can expect to pay monthly, what factors you should consider before getting a loan, and other mortgage-related concerns.
How Much Is a Monthly Payment on a Mobile Home?
How much you end up spending on a monthly basis to pay off your mobile home depends on a few factors. One of the biggest factors would be just how much your home costs. Those who invest in a single-wide manufactured home will understandably pay less per month compared to those who bought a double or even triple-wide home variant.
Moreover, different lenders offer a variety of packages to match every homeowner’s budget. There are some packages that give you the option to invest a bigger down payment in exchange for smaller monthly payments, and vice versa. Whichever one you choose affects your monthly payment, but should be based on a realistic calculation of your financial capabilities.
How does a mobile home loan work?
Before applying for a mobile home loan, first understand the different things included in the process:
If you are purchasing an existing or used mobile home, the home value determines how much the total home should cost. It also helps confirm if property mortgage insurance is needed in the sale.
This is the amount the borrower is borrowing against the mobile home. This is determined by considering the borrower’s debt-to-income ratio, credit score, credit history, financial profile, and the like.
The interest rate is what the lender charges the borrower, and is a percentage of the total cost borrowed. This percentage is added to the total due per period, often to the monthly payment. This is one of the most important factors to consider when weighing out lender options. Those with lower interest rates give you more value for money.
A loan program is basically the loan package agreed upon by the borrower and lender. This program takes into account the principal value (the total amount borrowed), the loan term (how long the borrower has to pay back in full), and the interest rate.
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A credit score determines a borrower’s dependability and likelihood to pay back in full. Borrowers with clean credit scores have an easier time securing loans and may even be offered lower interest rates and better terms.
There are at least two types of insurance to consider during the loan process. Property Mortgage Insurance (PMI) policies protect the lender and ensure that they get paid even if the borrower is delinquent. This type of insurance is typically only required when the Loan-To-Value is about 80%.
The other insurance type to consider is homeowner’s. This typically covers loss of personal property, structural damage and liability, and the like. Natural disasters are often excluded from the clause and need to be bought separately.
What factors should be considered before financing a mobile home?
Home financing options
There are multiple lenders offering a variety of financing options. It is important to weigh them all out to ensure you get the most value.
Ensure that the mortgage payment you agree to is realistic in relation to your income and debt.
Mobile Home Park or Community
Most if not all manufactured home loans are only for the home itself, not the land the borrower puts it on. The financial responsibility of purchasing or renting the land should also be considered.
Just like the multiple financing options available, it is important to consider the different insurance policies you can acquire for your mortgage.
How to calculate the monthly mortgage payment for a mobile home?
Calculating your monthly mortgage involves knowing your principal amount, monthly (or annual) interest rate, and the number of months you have for the loan.
How to qualify for a mobile home loan?
Not everyone is qualified to receive a loan. There are certain standards one must meet to be able to obtain this, such as:
Type of loan
There are 3 main types of manufactured home loans. Chattel Mortgages can be obtained from banks using movable property as a security deposit or collateral. A Construction Mortgage allows funds to be drawn in phases to complete certain construction goals. Permanent Mortgage Loans pay for a completed real estate project or the purchase of an existing home. There are many more types of loans to consider and if you are not qualified for one, know that there are other options!
Personal credit score
Your credit score is very important in getting a good loan. Any score below 600 would already make it difficult to qualify, but those of at least 620 still have potential. If lenders see that your credit score has been unsatisfactory, it would be harder for them to trust that you would get their money back.
Some other requirements include your income bracket and if you can settle the down payment. The home you are purchasing would also have to qualify by following the HUD’s safety regulations.
You’re All Set!
With a quick guide on financing your mobile home, we hope you have a better picture of where you can start and what you need to qualify.
For those looking for a ballpark figure, a downpayment for mobile homes could be as low as 5% of the total cost. If double-wide manufactured homes are on average $70,000 when brand new and the average loan term lasts 20 years, your downpayment could potentially be only $3,500 with a monthly payment of $280 plus interest.
Got more inquiries for your manufactured home? Feel free to reach out to us today!