Mobile Home Financing

Getting mobile-home financing is a changing prospect. Personal property loans used to be the exclusive vehicle for mobile-home financing, and though this type of loan still is widely available, some consumers now get mortgage loans for their manufactured homes. Learning what qualifies a building for a certain type of loan and how the difference may impact your finances is an important first step if you are considering purchasing a mobile home.

Types

Traditional mobile-home (or manufactured-home) financing comes only in the form of personal property loans. Because these loans are not attached to one location, many states consider them movable personal property and tax them the same as cars and boats. Financial institutions, then, lend money for them the same way. Since the mid-1990s, however, many companies making manufactured homes have increased the quality of the homes and increased their capacity to sit on a foundation. Many banks, seeing this changing trend, started programs specifically for mobile-home financing that views these properties as homes and grants more conventional mortgages.

Identification

In general, more permanency in a home's structure means a greater chance of obtaining a mortgage loan, which usually comes with better terms than a personal property loan. The U.S. Department of Housing and Urban Development runs a program called Title I, which is a loan guarantee program for people who are seeking a mortgage loan on a manufactured home. Its standards for permanency mean having a foundation and wheels removed. In addition, to obtain mobile-home financing along the lines of a mortgage, the building must pass third-party inspection for building codes. Homes not meeting these criteria continue to be classified as personal property for loan purposes.

Significance

The difference between personal property and mortgage financing can be significant. Bankrate.com, a financial resource website, puts loans for manufactured homes at a national average interest rate of just more than 7 percent. Personal property loans can have rates up to 15 percent. These loans also typically require a down payment and complete repayment over 10 to 15 years. Many banks now offer mortgage loans with longer repayment periods, such as Chase's manufactured-home financing program, which allows for a 30-year repayment period.

Benefits

Purchasing a mobile home is a way for families on tight budgets to purchase their own space without getting in over their heads in debt. Instead of being pushed into a lifetime of renting, these working-class people can have a chance at home ownership. Though manufactured homes in the past have depreciated quickly, such is not the case with many contemporary designs and building structures.

Warning

Check out your local area before purchasing a mobile home. Though most places are changing their regulations about where manufactured homes can sit, many still do not permit these homes outside of lots. Because of those restrictions, your loan options may be limited.