Mobile home loans are becoming more and more popular in California. Also called manufactured homes, they have become a great option for people who can’t afford a traditional, site-built home.
At Storz Management Company, our mobile home communities are designed with your needs in mind, from the layout of each unit to the extensive amenities we offer. Call us at (916) 989-5333 to learn more about our mobile home parks in California.
There are many ways you can get mobile home financing in California, but we’ll focus on the five most popular mobile home loans.
FHA Loans
Federal Housing Administration (FHA) loans are the easiest to qualify for because they’re
guaranteed by the federal government.
If you’re from a low- to moderate-income household, FHA loans are designed to help you achieve homeownership.
You can get an FHA loan with as little as 3.5% down payment and can qualify for it despite having a fair or poor credit score. This makes it easier to buy a home if you don’t have a large down payment saved up or haven’t built your credit yet.
FHA loans are one of your best options to secure financing for your mobile home purchase. Note that your manufactured home needs to be built after June 15, 1976 to qualify for an FHA loan. You may also need to pay private mortgage insurance with your loan.
Additionally, the FHA doesn’t issue loans itself but rather backs mortgages from private lenders. This means you’ll still have to transact with a private loan provider to get an FHA loan.
Conventional Mortgages
A conventional mortgage is a type of home loan that’s not backed by the government. You can find such mortgages from private lenders as well as Fannie Mae and Freddie Mac, two government enterprises.
Conventional mortgages typically require good credit scores and 20% down payment. They feature fixed interest rates, which means your interest payments won’t change throughout the life of your loan.
Notably, conventional mortgages can either conform or surpass the standards set by the Federal Housing Finance Agency (FHFA). Thus, you can get jumbo loans that exceed the funding limits of Fannie Mae and Freddie Mac.
Although most lenders won’t issue a conventional loan to help you purchase a mobile home, you can still get some from other providers as long as you meet their technical requirements.
Veterans Affairs (VA)
Veterans Affairs (VA) loans are available to veterans, active service members, and qualified spouses who are looking to purchase a home.
VA loans are backed by the government, so they feature low down payments and have competitive interest rates. You’ll also deal with lower closing costs, reducing your overall home expenses. As such, they’re an excellent option for folks with a military background who are looking to buy a mobile home.
However, one downside of VA loans is that they aren’t available in all areas. If you’re looking for a loan that will allow you to purchase property anywhere in the country, you’ll need to look elsewhere.
In addition, VA loans have higher interest rates than conventional loans. But this can be offset by their low monthly payment amounts due to lower down payments or seller concessions.
Chattel Mortgages
Chattel mortgages are usually considered to be more expensive than traditional home loans and have stricter requirements. Nonetheless, they’re an option if you’re looking to finance your mobile home purchase.
Prepare to meet these requirements to qualify for a chattel mortgage:
- Credit score: You’ll need an excellent credit score (around 680 or higher) to qualify for this type of loan.
- Interest and down payment: Since they are considered riskier than standard mortgages, chattel mortgages often come with higher interest rates and down payment requirements compared with conventional home loans.
- Income: you may need a higher income and a good debt-to-income ratio to qualify for this loan.
Personal Loans
Since mobile homes aren’t classified as real estate, you can use a personal loan to finance your mobile home purchase.
A personal loan is not subject to the same regulations as other types of loans. Moreover, you can easily find unsecured personal loans, which means you won’t have to put up your mobile home as a collateral.
However, personal loans often come with higher interest rates and shorter repayment terms compared to conventional mortgage loans. This means you may have to deal with increased monthly payments if you go this route.
Moreover, personal loans tend to have a maximum loan amount of $100,000, which may be insufficient if you’re looking to purchase a new mobile home. However, this may be enough if you’re buying a used unit.
Nonetheless, it’s relatively easy to get a personal loan, which you can do 100% online. Providers can decide on applications within minutes and fund loans within the day. This is significantly faster compared to other home loans that may take weeks, if not months.
Step-by-Step Guide to Mobile Home Financing
Whether you’re purchasing through an independent dealer or a factory-direct dealer, here’s what you should know about getting financing for your new mobile home:
1. Check your credit score
To get started, you’ll need to know your credit score, which is a number between 300 and 850 that represents your ability to pay back a loan.
This rating is used by lenders to assess your ability to pay back loans and determine what interest rate you will be charged. Your score is affected by several factors, including:
- Your payment history
- The length of time you’ve had accounts open
- How much available credit you have
- How many times you’ve applied for loans or lines of credit in the past year
Credit score is a powerful tool that can be used to help you get a mortgage or mobile home loan with the best possible interest rate.
If your score is lower than you want it to be, you can take steps to raise it and improve your chances of getting approved for a loan.
2. Choose the right lender
The next thing you should do is find a lender who knows mobile homes and will work with you to understand your situation. Be wary of lenders who offer low rates but don’t explain the process or costs to you. You don’t want to sign up on a loan before knowing what it entails.
At first glance, mobile housing financing may seem complicated, but it doesn’t have to be with the right expert in your corner! A good lender will explain everything clearly and help you make an informed decision based on all information available.
Before deciding on a lender, ask them how long they’ve been working in the industry and how many loans they’ve closed on mobile homes (the longer they’ve been around doing this type of work, the better).
3. Get prequalified
Prequalification is a lender’s assessment of how much you can borrow. You get prequalified when you provide the information your lender needs to give you an estimate of how much they’re willing to lend.
Although a prequalification is not a guarantee that the home loan will be approved, it does give you an idea of whether or not your loan will be approved based on your credit score and debt-to-income ratio.
If the home loan gets denied because of bad credit or low income, getting prequalified helps reduce some of that disappointment by letting you know in advance.
4. Do the math
Now that you’ve done your research on the mobile home community you want to live in and found a home that fits your needs, now’s the time to crunch the numbers and figure out how much financing you’ll need.
There are a few factors affecting this calculation:
- How much is the down payment?
- What’s your interest rate?
- How long do you plan to keep the loan?
You can use an online calculator like this one from BankRate or LendingTree to help calculate these figures if you’re unfamiliar with them.
5. Submit your loan application
Before submitting your loan application, make sure that you’ve already researched what constitutes a good offer in the current market.
Once you understand the lending climate, choose 2-3 lenders and send them a complete application. Compare their offers and pay close attention to their interest rates, APRs, closing fees, and payment terms.
Applying to multiple lenders allows you to compare rates and fees, but sending too many might negatively impact your credit report due to numerous credit inquiries.
6. Final considerations
Before you start shopping for a mobile home, it’s important to take some time to get your finances in order.
You’ll want to make sure that you have the best financing package available, and that means getting prequalified for a loan and choosing the right lender. The last thing you want to do is choose a lender who promises more than they can deliver.
It’s also advisable to take into account any additional costs involved with buying a mobile home before making an offer on one. So that you don’t end up having to pay more than what was originally agreed upon.
Conclusion
Buying a mobile home in California can become difficult and complicated, especially if it’s your first time. However, the process may be easier if you have access to the right resources and know what you’re looking for.
To ensure that you’ll find the best loan that’s available to you, research about your options and learn everything you can about them. You can start with our list of financing options for buying a mobile home and consider which will be a fit for your needs, preferences, and situation.
To learn more about mobile homes, you may contact Storz Management Company at (916) 989-5333 or leave us a message here.
