Purchasers of manufactured homes often use short term financing from a bank (for example, a five year balloon note) or short term, very high interest rate owner financing to cover the cost of setting up their new home.
Since each of these methods of financing the manufactured home must be paid off in a short period of time, owners of manufactured homes should begin looking for replacement financing as early as the end of the first year of ownership. Only at the end of the first year can the loan can be based on the appraised value of the home instead of its original sales price.
Although FHA has fairly stringent property guidelines for manufactured homes, a loan officer experienced in this area can guide borrowers through the effort with no more hassle than a traditional mortgage. The major advantage of an FHA loan for this purpose is that an FHA loan provides the best chance to take advantage of today's low mortgage rates rather than having to use higher conventional rates with manufactured home rate add-ons. An FHA loan for a manufactured home has all the same attributes as any other FHA loan, including the option for streamline refinances later should interest rates go down. If the property meets the requirements, the loan is processed exactly like an ordinary FHA loan.
If you have a manufactured home that you need to refinance, the first step is to check the side of the house for a set of HUD tags which indicate that the home was built according to HUD standards. In order to qualify for FHA financing, this tag must be attached to the property, or you will have to pay to have the tag number researched.
Once you know the home was built according to HUDs building code, the next step is to verify that the foundation was installed according to HUDs detailed guidelines. In order to do this, you must hire a structural engineer to inspect the foundation. The cost for this can be added into your new mortgage.
Whether you have good credit and a balloon note at the bank, while your property value is not high enough to qualify for a conventional 30 year fixed rate mortgage, or you have had some credit problems and are stuck with high interest rate owner financing, FHA may have a solution for you.
Author: Carl Pruitt
Comments