Mobile Home Loan – Financing and Refinancing Mobile Homes

'Mobile homes' is the term used for prefabricated homes that were built between 1970 and July 1976. The homes built after this period are called 'manufactured homes'. However, many people still continue to call them mobile homes.

Mobile homes have quite a following in the United States for the following reasons:

• They are easier and quicker to set up than traditional brick and mortar homes.
• They cost a whole lot less than traditional homes.
• They come in various designs and sizes.
• Nowadays they have a very high standard of manufacturing.

A high standard in manufacturing wasn't always the case, however, and that has given mobile homes a somewhat bad reputation amongst both buyers and lenders. It is also a fact that mobile homes, however well-made, depreciate in value over the years. Which means, frankly, that they are not such a great prospect for refinancing. It is not impossible to get financing and refinancing for mobile homes, but you will generally find that the lending institutions are less eager to bankroll mobile homes than they are traditional homes. If you meet their stringent requirements, you can get two kinds of mobile home loans – one in which you get the loan only for the mobile home – this is known as Chattel Mortgage – and another in which you get loan for the mobile home together with the land on which it is going to be set up.

You must meet the following conditions in order to be eligible for a mobile home loan:

• You must have good to excellent credit. You need to have a credit score of 600 or higher. If you have bad credit, you can forget about getting a loan. Business is business.
• You must have at least three open credit accounts.
• You must have had an established credit for at least the past four years.
• You must be currently employed and you must have a steady employment history. If you are self-employed, you must be able to show tax filings for at least the past two years.
• You must have no recent history of repossession and bankruptcy.
• If there are any co-signers for the loan, it must be an individual or individuals that are going to be living in the mobile home. You cannot co-sign for a mobile home loan if you don't intend to live in it.
• You must be able to make a 5% down payment on the mobile home you are buying.

Most lenders will offer you a mobile home loan for a maximum term of 25 years or for a minimum term of seven years. The interest rate you qualify for depends upon -

• The down-payment you make.
• Your credit standing
• Your employment history
• The state in which you reside

And the home for which you want financing or refinancing must meet the following conditions -

• The mobile home must have been built after 1977 and must have been built to HUD standards. It must have a notice inside stating this fact.
• The mobile home must be over eight feet wide and must cover at least an area of 700 square feet.
• The mobile home must be situated in a mobile community park, on a leased land or on a land owned by the buyer.
• If the mobile home is in a mobile community park, the owner must have been already approved to live there by the community office prior to making the application for loan.
• The mobile home must have had its wheels, shafts and hitch removed.
• The mobile home must be securely affixed on to a permanent foundation.
• If you're refinancing the mobile home, it must not require any major repair works.
• The home must undergo an independent professional appraisal or inspection.

Things to keep in mind when applying for a mobile home loan:

• Check prices offered by different mobile home companies. For preowned homes, check prices of other up-for-sale homes in the area. This way you can find out what the overall market price is and if you're being asked a reasonable sum, and you also have a wider choice.
• Contact a well-reputed, qualified lending institution for your mobile home loan.
• Make sure that the lending institution is an independent one and not connected in any way to the mobile home dealers you're buying from. This way there is less chance of the two ganging up to sucker you out of more money than you really need to pay.
• Be prepared to have your credit profile, your employment history and your verifiable income thoroughly checked.
• Mobile home loans usually do not cover the transport costs for conveying the home to the site and any required property or community taxes.
• You may be required to pay closing fees and commissions on the loan. Ask in advance what those will be, so you're not unpleasantly surprised.
• Don't overstretch yourself with too many other loans.