Choosing your new house is both fun and exciting but unless you have cash, which very few people do, there is the reality of financing your investment. The good news is financing can be painless since most applications can be done online. And although it makes no difference to us who you use for financing, there are different lenders for different circumstances.
Loans on Manufactured Homes sited in a manufactured home community are called a Home Only or Chattel Loans. They are more like a vehicle loan than a home mortgage loan and ownership is transferred with a title, like a vehicle, boat, or RV. The lender puts a lien on your title just as they do with an automobile and the title is then mailed to you the homeowner or held by the lender.
There are many lenders that originate Manufactured Home loans in communities however, they are a specialty product that is never done by traditional high-fee home mortgage lenders and are different enough from vehicle loans that they are seldom if ever done by local banks and credit unions.
One common requirement that all Manufactured Home Lenders share is the necessity for an applicant to have had or presently have a major installment loan. This is a loan that is normally $5,000 – $10,000 or more secured by a vehicle, manufactured home, motorcycle, snowmobile, RV, or a traditional home mortgage. The only way to avoid this requirement is with a cosigner or a very large down payment. The cosigner must qualify for the loan on their own, meaning both the borrower and cosigner must qualify individually. To circumvent the major installment loan requirement with a larger down payment, depending on the other credit circumstances of the applicant, the down payment will be between 20% and 50%.
Bankruptcies and repossessions generally must be three years old with no late payments and credit reestablished (major installment loan) during that three-year period.
The good news is Manufactured Home loans have fewer fees associated with them than traditional home mortgage loans. These fees also change depending on the credit quality of the applicant but normally are about 2% of the loan amount and can usually be financed in the loan so your required down payment is only affected by your percentage down of the fees. For example, if you are putting 10% down on a $50,000 loan your additional downpayment would be 10% of the $1,000 origination and appraisal fees – so $100 more down payment required.
As noted above, different lenders in the Manufactured Home space have varying degrees of risk tolerance but they can generally be divided into six categories as shown in the click-to-view below.