Why is it so hard to refinance a manufactured home?Manufactured homes, also known as mobile homes, are an affordable housing option for many families. Owning a mobile home can be a source of pride and security for a lot of people. However, when it comes to refinancing a manufactured home, you may encounter some challenges. Unlike traditional homes, mobile homes are classified as personal property and not real estate. This means that borrowing money against them can be difficult. In this article, we will look at the reasons why refinancing a manufactured home is so difficult and what options are available to homeowners who want to refinance.
Understanding the classification of manufactured homesManufactured homes are classified in two ways: as real property or personal property. This classification determines whether a homeowner can finance their property using a mortgage or not. Homes that are permanently fixed to a foundation and classified as real property can be financed using a mortgage. However, mobile homes that are not permanently attached to a foundation are classified as personal property and cannot be refinanced using conventional mortgage loans.
Factors that affect eligibility for refinancingSeveral factors affect eligibility to refinance a manufactured home. Some of the crucial factors include the age of the home, its condition, location, and whether it’s considered real or personal property. Lenders typically require that a manufactured home be less than 15 years old and in good condition for a homeowner to qualify for refinancing. Additionally, most lenders will only refinance homes that are attached to a permanent foundation. Key point: Mobile homes that are less than 15 years old and in good condition are more likely to be eligible for refinancing.
Real property vs personal property: what’s the difference?Real property refers to land and the structures attached to it, like a permanent foundation. When a manufactured home is permanently attached to a foundation, it becomes part of the real property and is classified as a traditional home. Mortgages may be used to finance these homes. Personal property, on the other hand, is movable property that is not attached to real estate. Personal property typically includes cars, boats, and mobile homes. Mobile homes that are not attached to a permanent foundation are classified as personal property.
The benefits of refinancing a mobile home attached to a foundationIf your mobile home is attached to a permanent foundation, you may be able to secure a loan against it since it’s classified as real property. A few benefits come with refinancing a manufactured home attached to a foundation, including:
- Lower interest rates and monthly payments
- Access to larger loan amounts
- Built-in home equity
Challenges faced when refinancing a mobile home not attached to a foundationIf your mobile home is not attached to a permanent foundation, the primary challenge you will face when refinancing is finding lenders who are willing to finance your home. Lenders are less likely to offer loans for personal property since these structures often depreciate in value. Additionally, it may be challenging to find a lender who offers loans for mobile homes that are more than 15 years old or in poor condition.
Exploring alternative financing options for mobile homesIf refinancing through a conventional lender isn’t an option for you, some alternative financing options are available. These include:
- Personal loans
- Owner financing
- Renovation financing
Tips for preparing to refinance your manufactured homeIf you’re interested in refinancing your manufactured home, there are several things you can do to prepare:
- Ensure that your manufactured home is attached to a permanent foundation
- Check your credit score and make sure it’s in good standing
- Research lenders who offer loans for manufactured homes
- Get a home inspection to identify any needed repairs
- Gather all relevant financial documents