shopping for a mobile home loan
How do I know if the mobile home loan I was offered was a good one?
My income is right around the $40,000. range. I am contemplating purchase of a 1972 mobile home, priced at $40,000. The agent is representing both parties which I know is not ideal. She has presented me with a 9% loan for 20 years, at a monthly payment of 323.91. Starting in 2011 the mobile park is going to require that the tenants purchase their spaces, but if I purchase before 2011 and at my current income, I can stay on the "rent for the space" basis. If a person's income is $46,000 or more they will need to purchase. I am not happy with the 9% interest rate or what I consider the uncertainty of the space status. This price is probably the best opportunity I will get for a structurally sound mobile in a very nice park. I very much want to do this but I wonder if, from what I have told you, this is an unwise move. Can you enlighten me from the information you have from me? My credit score is 887, by the way. Thank you.
- Learn about mobile home loan requirements.
- Shop around to find the best mobile home loan available.
- Be aware of the pluses and the minuses of mobile home ownership.
Mobile home financing requirements are stricter than those for standard home loans, making mobile home loans harder to obtain. Many lenders do not offer any programs for mobile home loans. Even with lenders that do, there are usually additional requirements for mobile home loans. Some lenders do not lend below a certain dollar amount. Some do not lend for mobile homes that are before 1976, as the lender is concerned about the age of the unit and the depreciation that has taken. Most mobile home financing agreements require the home sit on a permanent foundation.
In addition to the stricter requirements, mobile financing usually comes with a higher interest rate. It is not uncommon to pay 2-3% more in interest than one would pay on a standard home loan.
Conflict of interest?
It strikes me as unusual that the sales agent you mentioned also acts as a broker for the financing. In stick-built housing, the real estate agent customarily keeps their distance from the buyer's financing issues. The fact that the sales agent also seems to be acting as your loan officer strikes me as more of a conflict of interest than the sales agent representing both the buyer and seller.
Shop around for the best deal
I think you would be wise to shop around a bit. Ask the agent what company she found the 9% rate. Call them directly and see if you find them more flexible. A good idea is to check with a local bank or a credit union in your area. Lastly, do an online search for "mobile home financing." It could turn out the best deal out there is the one that the agent sourced for you, but do your due diligence before you commit.
When shopping around, it is important not to have your credit report pulled too often, as that can lower your score. You mentioned that your credit score is 887. I am not sure what scale that score is from. The most used credit scoring system, FICO, has a high score of 850. It may be useful for you to get a free credit report, before you speak to lenders, so you can tell them your FICO score and ask what kind of loans are available. They will need to pull a credit report, before offering you financing, but should be able to quote an interest rate and fees to you, based on your income, your revolving debt, and an estimate of your FICO score.
Make sure to determine whether the loan you are being offered is fixed for its entire term or fixed for a short period and then subject to adjustment.
Other factors for you to consider are whether or not there are other mobile home parks in your area, in case circumstances require you to relocate down the road, and what fees you will pay for the closing costs on the loan. Also, know that it can be hard to sell a mobile home. One reason is that the value can drop, leaving you owing more than the mobile home is worth. Also, if you try to sell it, the buyer may not be able to get a loan to finance the purchase, making it harder for you to sell.
Check to see if your state offers extra protections
Some states, notably California, have extra consumer protection laws for residents of mobile home parks. These laws are in place because unscrupulous mobile home park owners in the past took advantage of tenants with onerous rules or unreasonable fees. Consult with your state's consumer protection agency to learn if your state offers special rules that protect mobile home park residents. If so, get a copy of these rules to better understand your rights.
I agree that the uncertainty of the space site is not ideal, but it could be outweighed by the fact that the price is the best you are to find for a structurally sound mobile in a good park. There is no such thing as a sure thing. I do not feel able to advise you to make one choice over the other, but if you take into consideration the issues I raised, I am confident that you can make the best choice for yourself.
I hope this information helps you Find. Learn & Save.