Purchasing a new manufactured, modular, or mobile home is a substantial financial investment. For many, it is the largest investment made during a lifetime. Fortunately there is a large number of financing options available as you research the best methods for purchasing your new home. But first, some education: Let’s quickly go over a few options and considerations in regards to paying for your new manufactured home...
Some homebuyers have ample monetary reserves and choose to pay for their new homes in full and upfront. If this is your situation – congratulations! There is little-to-no need in considering financing as a purchase option.
Cash purchases are generally the fastest route to homeownership.
With a conventional mortgage, your new home is financed and purchased as real property. This means that the home and the land are bought and/or financed together. There will be a loan application and credit approval process - usually through a bank, credit union, or independent mortgage broker. Once your loan package is finalized with your lender and your land/home combination in order, you will attend a ‘closing’ where the ownership process is finalized.
Remember, the conventional mortgage approach is usually taken when your new home and building site land are purchased together.
Chattel Mortgages are personal property loans. This method is used when only the home is financed. That is, chattel mortgages are utilized when you do not yet own your land – or – already own (or have documented possession of the land) where we will be placing the new manufactured home.
Unlike a conventional mortgage, you will be provided a Title instead of a Deed with Chattel Mortgages. Only when land is included in the purchase will you receive a Deed.
If you are buying a home that will be on leased property, a chattel mortgage may well be the only financing option available. This type of ‘leased land’ financing is common in planned communities or manufactured home parks, where the buyer doesn’t actually own the land.
These fees are similar across the board for all home buyers, regardless of credit history, income level, or other considerations. The really good news is that these closing costs are included in the loan amount in over 90% of our transactions. That is, you typically do not have to come up with large sums of money to pay closing costs out of pocket.
Whether you finance with a conventional or a chattel mortgage, you will need some form of down payment and enough funds to cover closing costs.
Down payments can be as low as 3.5% of the total home cost. Example: With a home price of $50,000, your down payment would be $1,750. However, an average down payment is usually about 10% of home price.
Your common credit score means very little when it comes to financing a manufactured home.What is important is a FICO score (this is a very specific ranking of your credit for mortgage purposes).
If you allow one or more entities to pull your credit prior to your manufactured home purchase, you risk damaging your FICO score. Additionally, some unscrupulous re-sellers of homes will intentionally steer your credit ranking and credit application towards financial institutions they own and/or control (which can lock you into higher than market interest rates).
At Regional Homes of Hamilton, we work with several independent, reasonably-priced financial institutions. We actively and tirelessly seek to ensure that you get the best possible sales price on your new home as well as the smallest down payment, the lowest competitive interest rate, and most affordable monthly payments available based on your financial status and monetary position.
As part of our overall service to you, we will sit down and assess your unique financial picture. Together, we can establish the best possible loan scenario for you.
Have more questions regarding the financing process? Contact us today. Once you get your basic financing situation figured out, you’ll be ready for the next step.