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Need a Manufactured Home Loan? Everything you need to know
06-23-2022About MortgagesEddie Knoell
In this post, we're talking about purchasing a manufactured home. In the hot purchase market we’re currently in, it’s a great time to talk about manufactured housing options. We've seen a big increase in our buyers pursuing manufactured homes recently. These include:
low home supply,
the fierce competition between buyers shopping in the mid-300k price range,
the increase in post-COVID remote employment statuses, and
a lot of buyers are looking to make some lifestyle changes, wanting room for a garden, chickens, pigs or goats, things that most HOAs aren’t likely to be too keen on.
Benefits of Buying a Manufactured Home
Now, these aren’t your grandparents manufactured homes. Some of these will blow you away. You might even be hard pressed to even prove they’re manufactured homes.
There are some great benefits.
They may offer more square footage for less money.
They may be situated on larger sized lots (one acre +).
They will appreciate over time.
They can be purchased using conventional, FHA, or VA financing.
Drawbacks of Buying a Manufactured Home
But, of course, as there is with essentially any decision, there are some drawbacks.
They will not likely appreciate at the same rate as a traditional detached home.
If re-selling, the pool of buyers will be a smaller fraction of the larger market.
If refinancing for a cash-out, the guidelines are stricter.
The interest rates may be up to half a percent higher.
The mortgage insurance may be up to a quarter of a percent higher.
Eligibility criteria of a qualifying home
Now if you’ve found a listing you’re interested in, these are some things you’ll need to take a look at when assessing your eligibility.
It must be built in compliance with the Construction/Safety Standards of 1976 or later. This compliance shall be evidenced by two labels: an HUD tag, which will be afflicted to the outside of the property, and then the second is a HUD Certificate on the inside. It’s usually affixed to the cabinetry in the kitchen.
The unit cannot have been previously installed, or occupied, at any other site or location.
The unit must be legally classified as real property as evidenced by an Affidavit of Affixture that is recorded with the county. It cannot include an accessory dwelling unit.
The manufactured home must be attached to a permanent foundation system in accordance with the manufacturer's requirements for anchoring, support, stability, and maintenance.
The manufactured home must be permanently connected to a septic tank or sewage system, and to any other utilities required in accordance with local and state requirements.
There must be adequate vehicular access. If the property is not situated on a publicly maintained street, then it must be maintained property.
Also, it’s important to keep in mind that manufactured homes that have an addition, or have structural modifications, are eligible under certain conditions. It’s totally okay if you want to have, say, a raised patio deck. Just remember that, in these cases, a third party inspector may be required to come out and verify that the improvements made do not in any way affect the structural integrity of the home.
Potential issues that could delay the purchase of your manufactured home
As mentioned, if financing using a conventional loan and the appraiser calls out any attachments or modifications (awnings, decks, roofed decks, etc.) a third-party inspector may be required to evaluate the structural integrity of the improvements. This may add time and money to the transaction.
If financing with an FHA or VA loan product an engineering certificate is required. This may add time and money to the transaction.
If the unit is located in a rural market area with low population density, getting an appraiser to accept the order will take time and patience. The location may also add expense to the appraisal report fee.
If the unit is an unfinished new build, it may require more than one inspection.
If you have any questions about your specific scenario feel free to give us a call at 602-535-2171 and we’d be happy to help.
Frequently Asked Questions About Buying a Manufactured Home
Can I buy a manufactured home with the original intent to use it as a rental or investment property?
No. It’s a sad no and, again, it’s another reason why this affects appreciation. When you go to sell your home, not only is there a limited pool of buyers but you can’t sell to investors.
Are single-width manufactured homes eligible for purchase?
Yes. However, additional financing limitations and guidelines apply. If you have any questions, feel free to give us a call at 602-535-2171 or shoot us an email at firstname.lastname@example.org.
Can I purchase a manufactured home that is located on a leased lot (like a mobile home park)?
Generally speaking, no. However, there are some exceptions. An example would be if the lot is an approved condo project, in which case there are some programs that are very interesting. But, by and large, most condo projects are not going to be approved, so most mobile home park acquisitions cannot be done using conventional financing.
As always, we’re here to help
If you have any questions, please give us an email at email@example.com or call us 602-535-2171. We’re always happy to help. Also, if you have a question, you’d like us to answer here in our blog or on our podcast, send that along as well. Be sure to check out our other videos on our YouTube Channel.