The Difference Between Mobile Home Loans And Other Mortgages

Some people are surprised to learn that there are differences between mobile home loans and regular mortgages. After all, it’s a home, right?

Because mobile homes are, well, mobile, there are a few different types of loans for them. The majority of buyers will end up with a land and home loan, which means the land and the mobile home are together in the same loan, which ends up being much like a traditional mortgage. Some banks charge higher interest rates because of the faster depreciation of mobile homes making them a bit riskier, but otherwise they are about the same.

Loans can also be had for the mobile home alone, if the customer so chooses. These are a bit strange because the banks often balk at lending money for the mobile home alone. This is because it is so easy to just pick it up and move it, making it both harder to track and more prone to unnecessary damage which may lead the owner to abandoning both the mobile home and the loan. Unless the borrower has an exceptional credit score, the will likely have to go with a land/home package. Even with a good credit score, they will probably need to put a substantial amount of money down. This creates a sort of paradox since the majority of those with great credit scores are not terribly interested in mobile homes.

Sometimes it is simpler to just purchase the mobile home used, but many times that adds even more complications when it comes to getting financed. For one thing, because they devalue so quickly, lenders do not like single-wide mobile homes. Many families will look toward HUD subsidized loans, even if they have decent credit scores, because lenders tend to jump on these as they are insured by the government. As great as this is for the lender, it adds some complication to the life of the borrower. One of the biggest issues with HUD subsidized mobile home loans is how the home is mounted. There are quite a few different ways to secure a mobile home, and only the most robust will pass HUD standards. This means that a family could happen upon a mobile home in a great area that is exactly what they need, but cannot finance it because it is not mounted correctly. It is possible to re-mount a mobile home, but once you roll the costs into the mortgage, the borrowed amount suddenly outpaces the value of the home rather quickly.

Mobile home loans for bad credit are also a possibility, however, you will have to speak to your specific lender if you’re in this situation. It often takes extra time to get approved and you can plan on having a higher interest rate.

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