- Financing a mobile home mortgage is more expensive than a permanent home.
- Seek an FHA-backed mobile home loan or refinance.
How to Refinance a Mobile Home.
Generally speaking, traditional mortgage lenders are reluctant to offer mobile home refinance loans because, unlike homes built on permanent foundations, which tend to gain value over time, mobile homes tend to lose value, or depreciate, as time passes. Refinance lenders take a security interest in a home in which they lend money, in case the borrower defaults on the payments, allowing the lender to foreclose on the home. During a foreclosure, a lender will sell the home to recoup as much of their money as possible. Because mobile homes tend to depreciate, it is more difficult for lenders to get their money back in a foreclosure. For example, if a bank lends $50,000 on mobile home based on its current value, and the borrower defaults 10 years later, the lender may only be able to sell the property for $10,000, meaning the lender may lose money in the process.
For an introduction to pre-screened mortgage lenders, the Bills.com Mortgage Refinance Saving Center makes it easy to compare mortgage offers and different loan types.
Specialty lenders allow borrowers to refinance their mobile homes. Keep in mind that loans on mobile homes are not the same as standard mortgage loans. Rather, they are generally referred to as personal property loans, and carry higher interest rates and shorter loan terms than regular mortgages. If you are interested in obtaining a refinance loan for a mobile home, look for a specialty lender who offers mobile home refinancing, and also see the FHA Financing Manufactured (Mobile) Homes page.
Again, you will probably pay a higher interest rate on a mobile home refinance loan than a standard home loan, so refinancing your mobile home may not be a sound financial decision. Make sure the interest rate offered to refinance your home will not cause you financial hardship.