The Complete Guide On How To Buy A Manufactured Home
Are you thinking of purchasing a mobile home but aren’t sure where to start? Don’t worry; you’re not alone. It might seem intimidating at first, but buying a mobile home is not all that different from purchasing real estate.
In this article, we would like to put your worries at ease by guiding you through how to buy a manufactured home and all the unique aspects that come with the process.
Mobile home park vs. private land
Probably the first consideration you need to make is whether you want to live in a mobile home park or on your own parcel of land. Mobile home parks aren’t so popular for no reason. Especially for new mobile homeowners, they provide a very convenient solution as they are already set up for all the needs of a manufactured home.
Mobile home parks are divided into lots that each are meant to house a home. These lots usually include all utility hookups, a yard area, a permanent foundation, and a driveway. You can find a park that sells their homes and lots in a package, only the houses and lease out the lot or bring your own home and lease a lot. They usually provide garbage collection and may have other amenities and services.
You will need to figure out all of this on your own if you plan on locating your home on a private piece of land. However, a mobile home park also comes with its own rules that you are accountable too. It can cause awkward situations if you want to move or get evicted.
Understanding mobile home sizes and prices
The easiest way to categorize and get a mental picture of manufactured home prices is to break it up by types. There are three main categories of mobile homes that have few major differences between them except for size. However, we can reassure you from the start that most manufactured homes are far more affordable than stick-built homes.
Our first category of mobile homes is single-wides. These homes are built as one single, inseparable unit that is transported as is to its location. They are the cheapest form of mobile homes mostly due to their size. However, they do have the major drawback of not qualifying for any financing other than chattel loans (and even rarely qualify for these).
They average between 600 and 1300 sq. ft. in size and they cost between $20,000 to $40,000. That means you only pay around $31 per sq. ft. of living space, which is unheard of in comparison to real estate. At around 18 ft. in width and 90 in length, they are usually long and narrow.
Double-wides are the most popular types of manufactured homes by some distance. They are the typical family-sized mobile homes. They are manufactured in two sections that are separately transported and then assembled on site. At over 20 ft. in width and less than 90 in length, they are slightly less rectangular than single-wides that make them much more flexible.
Most double-wides total around 2,000-2,500 sq. ft. in length, up to 3,000. This is comparable to small, mid-sized units of a piece of a family-sized real estate. Most units cost between $60,000-$80,000 so that they also average around $31 per square foot of living space.
For those with more extravagant taste, you can find mobile homes made of multiple sections that are separately shipped and then assembled. These homes can get huge enough that the description of “mansion” is not far off. They can be up to 50 feet in width with widely varying lengths. This provides the ultimate level of flexibility when it comes to layouts and floor plans.
The average manufactured home in this category is around 4,500. Prices per square foot of living space can be slightly higher in these models as they fall into a more luxurious bracket and are often special-made. Prices also vary dramatically, and the sky’s the limit. Expect to pay anywhere between $100,000 to $200,000 for a new home and up to $50-60 per square foot of living space.
New or secondhand?
Good question. Buying secondhand (or pre-loved, if you prefer) anything can be a great way to shave off extra cost for the same thing, sometimes with a negligible loss of condition. While nothing beats that “new car smell,” secondary mobile homes are a convenient and viable way to purchase your new manufactured home.
However, you should make some extra considerations to ensure that you still get a good deal and can comfortably and peacefully occupy your new residence.
Important things to consider before you make your big purchase
- HUD Code compliance: Ensure that the home is built post-1976 and that it has been kept up to date with the most vital updates to the HUD Code since then. You can hire a contractor to certify the home or establish it’s HUD-status.
- Age: Newer homes benefit from groundbreaking improvements in the construction and safety standards of dwellings that improve almost every year. However, the care and maintenance of home say much more about its condition than its actual age.
- Source: Some sources are most trustworthy and easier to deal with than others. Make sure that everything is done above board and inform yourself so that you can’t get duped easily.
- Financing: Financing a second-hand home purchase hinges on the home’s compliance with the HUD code just like a new model. It will also depend on whether the house has been moved before.
You can expect to slice around $10,00-$20,000 off the prices of a single or double-wide manufactured home. This depends on condition, HUD compliance, location, and market conditions. Manufactured homes are like cars, losing their value as soon as they lose their “new” tag and depreciate by around 3% yearly.
How to buy a manufactured home with financing
Even though mobile homes can cost a fraction of what the average stick-built home does, most people will still need financing to afford one, particularly in the current housing bubble. Although it might not be as straightforward as finding financing a mortgage for real estate, you still have some options open to you.
You can breathe in an instant sigh of relief, knowing that you should be able to purchase your home at an affordable rate. Manufactured home loans still have slightly higher rates than stick-built homes. This is slowly changing as the mobile homes are becoming safer, longer-lasting, and shaking their negative perceptions.
Here are the most common options:
Mobile homes can also qualify for real estate loans under certain conditions. Chief among the strict requirements for this type of loan is that you convert your mobile home to real estate. This constitutes removing the wheels and axles (rendering your home permanently immobile), affixing it to a permanent foundation, and registering it as real estate with your local authorities.
The lender or financial institution will also determine your financial strength by running a credit check (among other things). You will require a minimum credit score of 580 with 700 being ideal. Most lenders will require a minimum 5% down payment (it could be as high as 20%). Interest rates are highly dependant on the loan amount, your credit score, and the lender but start at 5%. Terms are anywhere from 5-30 years.
FHA (Federal Housing Administration) Mortgage
In most cases, the same lenders that offer conventional loans also provide for FHA-backed loans. These mortgages are insured by the FHA which means that they will continue paying your mortgage to the lender if you become unable to do so. As such, you will need to prove your ability to pay the loan to both the FHA and the lender.
An FHA insured loan is attractive because they come with lower rates with 3% interest not being unheard of. However, this also comes with additional restrictions such as shorter maximum terms, maximum loan amounts, etc. The home also needs to adhere to the HUD code as well as never have been moved.
VA (Veteran Affairs) Mortgage
This type of mortgage works precisely the same as an FHA mortgage except that the Department of Veteran Affairs insures the mortgage and not the FHA. As such, you will need to be able to prove your status as a veteran.
They have similar additional requirements and benefits as the FHA, and you can also apply for VA loans from most lenders. Down payments and interest rates are also much lower, just like with an FHA loan. Some loans even cover the total amount requiring 0% down payment at as low as 3.5% interest.
A chattel mortgage is a lien that a lender holds against an individual property until it is paid in full. It’s a type of mortgage that applies to personal property and not fixed assets like real estate. The added risk then is that your property will be repossessed if you can’t complete your payments.
The bad news doesn’t end there. Interest rates are also much higher and start at around 6%. The only good news is that the closing fees should be much lower than for any mortgage.
Be aware of potential customization options
If you are buying new, you will be ecstatic to know that most manufacturers offer customization options for their home models. The materials and manufacturing process used for these types of homes lends themselves well to customization. Using computer-aided design, manufacturers can effortlessly change floor plans and swap accessories like appliances, storage, etc.
This means that you can get something much closer to your dream home straight off the showroom. The customization options available are becoming more diverse and extensive with time. It has become a distinguishing factor when choosing which manufacturer to buy from.
Some of the standard customization options you can expect:
- Appliances: Nowadays, appliances can be as much a fashion statement as a useful part of your home. Some manufacturers let you choose which appliances should be pre-installed and might even let you choose your preferred models. Some offer packages like designer or eco-friendly appliances. Washers, dryers, refrigerators, and even coffee makers may be selected.
- Patio/exterior doors: Impress guests with full-sized sliding glass panes doors or ornate wooden egress doors.
- Kitchen cabinets: A stylish kitchen has quickly become one of the main features of a home. As kitchen cabinets make up such a significant part of the kitchen, more manufacturers are allowing users to choose their own style, colors, and materials.
- Tubs: You will be able to luxuriate by selecting your choice of bath and shower tubs. If you are lucky, you will even have the ability to choose your sinks.
- Showerheads and water taps: Bling, bling. What designer kitchen or bathroom would be complete with its own form of “jewelry”?
- Eco-friendly upgrades: Eco-friendly upgrades like storm windows/doors, insulation, eco-friendly appliances or AC, and roof membranes will help mother nature and your utility bill.
- Paint and texture: As the primary way to distinguish the home and set its tone, most manufacturers allow you to choose the color of your home. This could also include textures like stucco, brick face, faux wood, etc.
We could mention plenty of other customizations. The list of possible changes to make to your home is almost unending. You should establish the options each manufacturer provides to choose the best one for you that will be able to get you closest to your dream home. Clayton Homes, Manufactured Homes, and The Homes Direct are popular manufacturers that provide customization options.
Where to find a mobile home to buy?
The manufactured home market has grown big enough that you have multiple options when it comes to where and how you can buy a home. Each will have their own pros and cons that will suit the preferences and needs of different buyers. Ideally, you should make use of a few of these channels to get as much exposure as possible.
The first place you should look is online. Sites like MHVillage and Homes.com have thousands of listings that cover about every type of manufactured home you can think of. It’s a great place to start because you can quickly determine the average price in an area and find homes about anywhere by filtering on specific traits.
These dealers may be a little hard to find but may get you the best second-hand deals. Moving mobile homes are very costly and can potentially damage the home. Look for licensed local dealers that will help you find a house close to home with their network of mobile home park contacts. Expect some tough negotiation and extra closing fees.
These are companies whose whole business is built on buying mobile homes and selling them on. This process usually includes a slight refurbishment and proper deep clean. It’s one of the best ways to buy second hand because you can rest assured that these companies only buy great homes to start with. It’s also quick and painless to get a quote, and you deal with professionals all the way.
From the manufacturers
The most common way to buy new mobile homes is straight from the source. Buying new also means you can take advantage of the customization options these manufacturers provide. Be sure to do your research on which manufacturer’s style suits you best as well as in which areas they operate.
Let’s wrap it up
If you need some more help “sealing the deal,” read our article Everything That Should Be Included in a Mobile Home Purchase Agreement. We have also written an article to help you decide on the best time to buy a mobile home.
Good information is the most potent weapon in your arsenal when hunting for the best deal and to protect yourself against a bad buy. We hope that this guide on how to buy a manufactured home has given you the courage and the ability to enter the wonderful world of mobile home living.