The rules applied to mobile home real estate loans differ depending on the lender. Some mortgage companies want the mobile home to be as much like a standard home as possible, requiring that the home be on a fixed foundation. This means that the items which make the home mobile be removed such as the wheels, the hitch and axles, without which such a home cannot be transported off the designated property. Some lenders go as far as to require that the mobile home also be placed on a concrete foundation which makes it even closer to matching the specifications of a typical home. This is not a typical requirement but it may be one you’ll run into during your search for a mobile home loan.
Another difference with mobile home loans is that they can be separated based on exactly what is being financed. Mobile homes can be purchased prior to construction and the loan would cover those costs. Like any other construction loan, the lender covers the labor and the cost of the materials used in construction. This does not include any post construction expenses such as transportation costs to move the home to its final site, nor does it cover the taxes that go along with the move. This type of loan typically is purchased by individuals who currently live in a mobile home community or other area that is already prepared to receive the new mobile home. Another type of mobile home loan is one that combines the costs of purchasing the home plus the land on which it will reside. This type of loan is closer to a typical real estate transaction.
Financial companies are very doubtful in granting loans for mobile homes. The major primary reason is that their insecurity increases due to homes are in movable state. Many financial companies like banks and other lending companies have banned loans for mobile homes without land.
If the land is part of the mobile home loan, getting a lender to fund the mortgage is much easier as it removes that fear lenders have about seeing their asset drive away unexpectedly. These loans are more expensive, as the price of the land can add substantially more costs to the loan. Property taxes are not included in the loan, however, which is something to keep in mind.
The Housing and Urban Development (HUD) government department enforces strict standards on mobile home construction. This standard must be met before any type of mobile home mortgage can be completed. Also, as with any type of loan, the borrower’s credit rating is always taken into account and a low rating lessen the chances of getting a good rate on a mobile home loan.
Financial institution usually sanctions 75 to 90 percent of the total cost of the building the house for mobile homes. It is a long term mortgage which is normally above 10 years.
Graham McKenzie is the content coordinator for a leading South African leading Homeloans and Bond Origination portal which provides access to ABSA Homeloans.
