Mobile home equity loan
Mobile home equity loan or manufactured homes in USA are manufactured as per Home Construction and Safety Standards code (HUD code) in factories. They are transported to the owners building site. The owner can own the land on which it stands or the land can be of some society and the owner rents the land. These are cheaper and over 19 million people in USA live in these houses. To understand the comparison of cost. A medium size Mobile home costs $ 58,000 as against the same size conventional home built on new site costs $267, 000 apx. i.e. 4 times. Hence these types are a potential solution for millions of low and moderate-income families who are unable to buy conventional homes and have to remain in rented houses.
Financial options
Banks are the most common lenders but they need some definite safeguards .In general the loans are given for Mobile home equity loan fixed on permanent foundations and where the land is owned by the borrower. In other cases the borrower takes the help of brokers to find the willing lender who charges extra interests. The loan term is generally 15 to 30 Years and both fixed and floating rate loans are available.
'Mobile' means higher rates
It has been found that lesser mobile the home is more are the chances of getting a better bargain. Generally these homes are financed as a personal property and often require 10 % down payment .The interest rates are higher than the mortgage loans almost same as the car loans.
The reasons why the interest rates are higher are due to the fact that the lender has fewer assets to repay the loan and are on a tight budget, the lender have lesser collateral as the life span of these houses is lesser and the depreciation is large.
The lender directly processes the application of loan. A professional appraiser does the valuation of the property and then the loan terms are decided. In general the borrowers employ a mortgage broker who understands the terms thoroughly.
To qualify for a loan the following requirements are considered;
* Borrower should have a good credit record.
* He should have sufficient funds to give down payment of 5 % of loan amount.
* He should use the house as his permanent residence. * The site on which home is to be installed should be proper.* Manufactured home should have a one-year guarantee
* Home must have full utility facility like power, water, sanitation etc. Federal Government Act:The Federal Government Truth-in-lending Act requires all lenders to disclose Informations such as loan costs etc. so that the borrower can calculate his true requirements of the loan costs and make comparisons with the other lenders. The list of loan costs include headings like The Mobile home equity loan amount, the Annual Percentage Rate associated with the loan, Due date and terms of repayment. They have also to make it clear whether the loan is assumable and there are penalties on default.
There are certain guidelines to be adhered to while considering a loan of this type;
* Get the credit rating from the three credit bureaus namely Equifax, Experian and TransUnion.
It is still better if the rating is got from all the three .If the credit rating is good then a better bargain can be got from the lender. Otherwise also it is this on which will depend all the other terms of loan like interest rate, length of loan etc.
* After collecting quotes from many lenders the best one should be short-listed.
* Information and details regarding atleast 4 other lenders should be found from net or other sources as examples.
* Negotiation should be carefully done with the lender preferably with the help of a broker and the best terms decided.
* Loan agreement should be carefully read and it is better if it is got checked from a lawer.
* Once the terms are finalized then it should be promptly and honestly adhered to.
DrawbacksPeople who don't own the land on which their Mobile home equity loan is pitched do not feel easy. As always the question arises where we shall go and how to move the house if it gets old. This is why this industry of mobile homes, which saw a boom between 1997 -99 suddenly, crashed and now very less people are going for this alternative.
The main difference for borrowers in loans for this type of homes is the higher rate of interest. Main reason is that the manufactured homes depreciate faster and have a shorter life span.
Loan application fee, credit report fee etc. are all paid up by the borrower unlike the loan for the conventional homes. This makes the loan still more costly.
Although these houses are required to take off their wheels at the time of installation but still they are considered as potentially Mobile home equity loan. This is why the owners have to pay the vehicle license fee.
Conclusion More and more buyers are opting for mobile homes hence the no. Of lenders is expected to increase. At this time the top 10 lenders are controlling 65 % of the industry. Due to these factors buyers of these homes donot have the leverage to negotiate hence remain on the mercy of the lender.Other Articles
