A manufactured home loan is a loan product made specifically for the purchase of manufactured homes. It differs slightly from other home loan products and may be more accessible than a traditional loan for certain people. The manufactured home loan was created to fill a hole in the market where traditional lenders would not typically offer financing due to the type of home being built. Here's what you need to know:
Is Your Home Really a Home?
The very first thing you need to understand is that manufactured homes can be classified in two ways: personal property or real estate. At face value, you may look at a manufactured home and think that it should always be classified as real estate, but lenders disagree. Lenders only consider a manufactured home to be real estate when it is properly affixed to a piece of land with an approved foundation, rendering it immobile. If a manufactured home is already planted on land and qualifies as real estate, it will likely qualify for many of the same programs as a traditional site-built houses would. However, if you are planning on buying a manufactured home that is not currently on land, no matter what you have planned for it in the future, then you will need to apply for a manufactured home loan.
Why Manufactured Home Loans?
As you can see, the challenge of buying a manufactured home is that it may be classified as personal property, but there are almost no lenders who would offer you a personal property loan on an amount large enough to purchase your home. In addition, personal property loans typically come at a much, much higher interest rate than a traditional mortgage, which would make the monthly payments greater than if you just bought a regular house. Obviously, this would be a disservice to a large portion of the people who wish to buy manufactured homes, so now there are manufactured home loan specialists who have found a way to make things more affordable while opening up more options for choosing a home. These loans are designed to help you design and purchase the manufactured home of your dreams and have it placed on land when it is done. They typically can be competitive with conventional home loan rates when you have a good credit history. This means that your payments will be comparable and the possibilities for selecting a house are nearly endless. In addition, qualifying for these manufactured home loans are similar to qualifying for a conventional home loan, but lenders typically have more wiggle room with income and credit scores because they are not dealing with the secondary lending market that exists with traditional mortgages.
Basically, the manufactured home loan is at the crossroads between conventional mortgages and personal property loans. It offers more money for those who want to design a custom house and have it placed on a lot in the future, while also giving you more competitive rates and qualifications. For many people, this is a perfect solution when traditional lenders cannot help, and personal property loans are not feasible for most home budgets. By making money more accessible to this market niche, many lenders are finding that they can expand their services and draw in new customers who have previously been neglected. Plus, once the house is placed on land, there is ample opportunity for refinancing and other options because the manufactured home becomes valuable real estate once it is installed. For more information about what makes the manufactured home loan so important, visit Triad online today.