Many first time homebuyers have only considered the purchase of a traditional single family style home, but have you thought yet about purchasing a mobile or manufactured home?
Mobile homes, while generally not as popular, do provide one big advantage in that they can typically offer more space and amenities for the same amount of money.
With the high-priced housing market today, mobile homes have gotten a lot more attention from the eyes of millennials since they provide a much more affordable alternative to a traditional style home. Some reports even suggest that their values have been rising much quicker compared to that of their single-family home counterparts.
Mobile home manufacturers today create homes with many different price points and options ranging from economy up to higher end models. You can even buy a manufactured home that looks as though it had been built on site.
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Purchasing A Mobile Home
The process of buying and financing the mobile home is much different than that of a traditional home and obtaining a mortgage. If you are interested in purchasing a mobile home, here are some things you need to know including some hidden costs as well.
Types Of Mobile Homes
Mobile homes can give you an option between either a single or a double wide unit. There are even some companies that can build a triple wide home as well.
Factories will generally manufacture a single wide home with a narrower frame. Inside, they can create rooms that are generally connected to one another and then separated by hallways.
With a double wide home, its width is about equal to two single wide units connected to one another so that the mobile home ends up looking more like a traditional stick built single family style residence.
When buying a new mobile home you also need to either purchase or rent a plot of land where you can place your new home.
Financing Your Mobile Home Purchase
If you’re planning on financing the cost of your mobile home, the rules can be a little different compared to what’s involved with the financing of a standard single style family home. For many new single wide mobile homes, getting the financing is very hard to obtain from a private lender. You may however be able to finance through a mobile home sales company or credit union.
The financing rules involved for a double wide home will generally depend on the type of loan you choose. For a conventional loan there are many lenders that have a self-imposed 15 year rule, meaning that you might not qualify for a conventional loan if the mobile home you wish to purchase is older than 15 years.
For government backed loans, the mobile home must be considered an “original set”. What this means is that when you purchase a mobile home, it can’t have previously been set up someplace and then broken down and moved again. Lenders will also require the home to pass HUD specifications and coding regulations.
Insurance And Other Cost Considerations For A Trailer Home
For potentially new homeowners that are tired of paying rent, the purchase of a mobile home can seem like a great opportunity to finally reach homeownership with a price they can truly afford.
Even if they can’t afford their own lot just yet, they still have the ability to own their own home. They would then only need to be responsible for paying rent to a park owner to rent a plot. They can still typically afford a newer and more energy efficient style mobile home compared to that of any other traditionally built home for the same comparable price.
Since the cost to buy a mobile home is much more affordable than a traditional single-family style home, mobile home loans may also come with less of a down payment.
Many of the conventional loan programs have a minimum down payment of 5%, with some government backed programs even requiring less. Your interest rates however, may be higher than other single-family style home rates since many lenders tend to view mobile homes as a higher risk.
If you are able to get a mortgage for your mobile home your lender will be less likely to require you to carry insurance for your mobile home provided you have the loan. Just like a traditional homeowners insurance plan this insurance will protect you and the mortgage holder in the event of a natural disaster or damages caused from fire or theft.
If you’re thinking about the cost of all for a mobile home, you should consider the costs involved for the initial mobile home transport. And don’t forget to factor in the cost of depreciation. No matter what type of home it is, it will depreciate over time. Housing that had been priced separately from land generally won’t hold its value that well.
Since 1976, manufacturing standards have improved. Now, with new homebuyers able to expect their future value for their home investment to depend largely on its location and whether they are renting or have the home combined with its own lot, just like any other type of real estate investment.