Mortgaging Your Manufactured Home

Manufactured homes are a popular affordable housing option, accounting for six percent of all occupied housing in the country. Nonetheless, they occupy a much smaller portion of home loan originations, for various reasons: many residents of mobile homes are a more financially vulnerable population subject to higher interest rates and less favorable repayment schedules. 

Nonetheless, all hope is not lost for mobile home owners who want to seek financing for their homes. If you own a mobile home, you can seek traditional financing for your home. Before doing so, however, it is important to understand your options and to apply for the most favorable type of financing. 

Types of Mobile Home Financing

There are two primary ways to finance a mobile home: with a traditional mortgage or through chattel financing.

Traditional Mortgaging

If you own the land on which your mobile home sits and if your home is permanently affixed to the land, you can apply for a traditional mortgage, much like you would for a site-built home. 

A mobile home mortgage is secured by the same protections as a traditional home, as well as consumer protection laws like various state foreclosure and repossession laws that don’t apply to personal property loans. You will also have the option to apply for an FHA loan or a loan backed by Fannie Mae.

When applying for a mortgage, the key is to find the lowest, most favorable interest rate available to you. In doing so, keep in mind that your first offer may not be your best. As such, it’s a good practice to shop around before settling on a lender. 

Chattel Financing

If your mobile home is not affixed to the land, or if you lease the land on which it sits, your home will be classified as personal property rather than real estate. If this applies to your home, you will need to apply for a chattel loan instead of a traditional mortgage, which only applies to real estate. 

A chattel loan involves a slightly different financing structure and will allow your lender to hold a lien on the property, much as it would if you were financing a motor vehicle. Also, chattel loans carry much higher interest rates, which can start at close to seven percent (and will be even higher if you have a low credit score). 

At the same time, however, these types of loans are generally assigned a shorter repayment schedule, which lowers the total amount of interest paid throughout the life of the loan. Also, your closing costs will likely be much lower, and you will be able to close on your property more quickly.

Know Your Options

Before you take the step into financing your mobile home, make sure you understand what type of financing structure will apply to your particular property. Always make sure to shop around to find the best rate available and find an advocate who can help you ensure you are taking the right step forward given your particular financial situation and goals.

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At Harmony Communities, we feel strongly that each resident has a sense of home. That they come home from work and feel pride in their environment and in their place in the greater community. That families are comfortable raising children in our neighborhoods, and that couples and singles know that they belong to something bigger than their four walls. In other words, we seek to create harmony within each community, making our communities not just passable, but peaceful, safe, functional, and beautiful.