Types of Manufactured Home Loans

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Manufactured Homes
Manufactured Home Loan Types

There are numerous mortgage programs available for buyers who intend to purchase a manufactured home. The law considers manufactured homes to be personal property rather than real estate. This means lenders must finance them with chattel or personal property loans.

Chattel loans are available to buyers who do not own the land on which they plan to place their manufactured home. This financing type, however, comes with its own disadvantage. It blocks the buyer from real estate tax breaks, since the manufactured home is not real estate. Yet again, the down payments on these loans are mu ch lower and the loan periods are shorter.

In the case of having a land to place the manufactured home, the buyers are qualified to opt for numerous traditional real estate mortgages than a personal property loan. There are three types of such loans available for the buyer in buying a manufactured home:  80/20 loans, VA loans, and FHA loans.

80/20 Loans

These loans must require the buyer to pay a down payment amounting to approximately 20 percent of the purchase price. The monthly payments are lowered when the down payment is higher. This amount can get lower if not paying for the private mortgage insurance. This insurance helps the mortgage company to lose money in case if the buyer stops the mortgage payments.

The PMI needs to be dropped when the owed amount goes down to about 80 percent of the value of your home. Contact the company in such cases and drop the PMI for you to prevent any further losses.

VA Loans

For veterans, manufactured homes can be purchased through a VA guaranteed loan. One of the major advantages is that the federal government guarantees these loans, along with no down payment and a much lower interest rate.

It also offers many benefits than other loans, since most of them will not provide a 30-year mortgage. For veterans, VA loans are certainly the best financing option available in purchasing a manufactured home.

FHA Loans

The Federal Housing Administration is a part of the Department of Housing and Urban Development that offers loans for eligible buyers. It provides insuring into private loans for new and existing housing to enable people to buy homes.

FHA loans always pay the identical mortgage insurance rates despite the credit scores, which is one of its major advantages for anyone purchasing a manufactured home.