Mobile home (manufactured home) owners can take advantage of low mortgage rates like every other homeowner. Given that many older manufactured home loans feature unfavorable terms like high interest rates, balloon payments, and adjustable interest rates, refinancing to a new mobile home loan can save you money and give you more peace of mind.
Manufactured Home Refinance Rates – Getting Started
With the wide range of programs that lenders offer, you can practically choose any refinancing rate that you want. Are you looking for a very low rate? Choose a short-term fixed rate loan where you will pay very little interest and pay off your mortgage quickly. If you are willing to pay a higher interest rate, you can easily find loans that are as long as 20 years, with 30 year loans a possibility in some areas, as well.
Another way to get an even lower rate when you refinance a mobile home and land or just refi your mobile home is to improve your credit score. As long as your FICO score falls somewhere in the mid-600’s, lenders will let you refinance your property. If you have a FICO score in the mid or high-700’s, though, you can get an even lower rate. In fact, going from a 665 to a 740 score can lower your rate by 10 percent. That’s like going from a 5.0 percent loan to a 4.5 percent loan.
How to Refinance a Mobile Home
While having adequate credit is important if you are looking to refinance your mobile home, there are other factors that your lender will look at as well. You will have to have enough income to service your manufactured home mortgage and you will usually need to be able to document it with paystubs and W-2s.
Lenders will also look at the configuration of your home. Typically, it will need to be at least a single wide property with at least 600 square feet of living space. To get the best rates, you will probably end up with a lender that requires it to be permanently attached to its utility connections and that requires that it have all of its towing hardware removed. After all, they don’t want you to drive away with their collateral!
The Benefit of Today’s Refinance Manufactured Home and Land Rates
Today’s manufactured home refinance rates come with significant benefits:
- Many loans carry fixed interest rates for their entire term. This lets you lock in today’s low rates for the life of your loan and not have to worry about them going up in the future.
- You can get “fully amortizing” loans. These loans gradually pay down to a zero balance which is different than a loan with a “balloon payment.” With a balloon loan, you make monthly payments until your loan ends. When the loan ends, you have to pay the remaining balance off in a lump sum or go out and find another loan. Fully amortizing loans save you from the inconvenience and expense of having to refinance them.
- You can refinance even if you have relatively little equity. Lenders make manufactured and modular home refinances at loan to value ratios as high as 95 percent. If you have at least five percent equity, you can probably find a loan!
What about Government Programs and Mobile Homes?
One of the biggest factors impacting the availability of refinance loans for mobile home owners is the role of government agencies and government sponsored entities. Freddie Mac, one of the largest buyers of traditional home mortgages also has programs where they buy and guarantee mobile home mortgages. They support lenders who make fixed and adjustable rate mortgages of up to 30 years in length and with LTVs as high as 95 percent, as long as the homes are permanently attached to the land. Freddie Mac even supports cash-out refinancing loans. This makes loans on qualifying mobile homes much cheaper.
The same Federal Housing Administration that helps banks offer low-down programs to traditional homeowner also provides a similar program for mobile home owners. FHA’s HUD-1 loan program allows you to take out 15 year loan on a lot, a 20 year loan on a home or a home and a lot and a 25 year loan on a multi-section home and lot. They require that your loan be fixed, saving you from the risk of adjusting interest rates. While FHA loans have limits of $69,678 for a home, $23,226 for a lot or $92,904 for a home and lot, they can lend you more money for your lot in certain high-cost areas. These loans give you access to very low rates and relaxed qualifying guidelines.
While it used to be that you were at the mercy of your dealer’s finance office when you needed to take out a manufactured home loan, things are very different in today’s market. Between the wide availability of money from government-sponsored lending programs and the increased competitiveness of the private lending market, great refinancing opportunities are available on today’s market. Today’s manufactured home refinancing can save you hundreds of dollars a month whether you are looking to refinance just a small single-wide home or a large modular home with land.
Modular Homes vs Mobile Homes
It is important to understand the difference between a modular home and a mobile home. Modular homes are similar to normal single-family homes and they follow the same construction codes. Generally, modular homes are built up at a plant or facility, in several pieces, and then transported to the building site.
There are several mortgage companies offering mortgages and refinancing for modular homes.