About Home Equity Loans for Mobile Homes
Under most circumstance, a motor home is considered personal property, thus securing a second mortgage, or home equity loan, cannot be considered. However, if the motor home is on a fixed foundation where it cannot be moved, it is considered real property and can be mortgaged just like any other form of real estate.
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Significance
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By not being able to secure a home equity loan on a mobile home, a borrower is limited by how he can use the proceeds. If the mobile home is on a fixed foundation, and thus considered real estate, a person can apply for a home equity loan and use the proceeds for such things as bill consolidation, education, a new automobile, improvements to his mobile home or whatever he may choose.
Considerations
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In order for to obtain a mobile home equity loan, a first mortgage must already exist. That will prove to the prospective lender that the mobile home qualifies for this type of financing. You need to be at least 18 years of age, have an excellent or good credit score, and be able to verify a source of regular income.
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Types
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There are two types of mobile home equity loans. The first is a pure home equity loan, secured by the equity you have in your mobile home, and the proceeds will be paid to you in a lump sum. The other type is a mobile home equity line of credit. You will most likely be issued a credit card to draw down a portion of the proceeds of the loan as you need it. Both loans and lines of credit have a specific termination date.
Benefits
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Your choice of how the funds from your mobile home equity loan or line of credit is completely up to you, unlike personal loans where you must state the purpose of the loan in your application. Also, since this type of loan has a much longer maturity than a personal loan, the monthly payment will be much less. Finally, just like a personal loan, a real estate loan can be paid off at any time prior to its maturity, without penalty.
Warning
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In order to qualify for a home equity loan, your mobile home will have had to be built within the last 30 years, but preferably later. If your mobile home has undergone alterations or changes, those changes must not violate the HUD code. Your mobile home must be well-maintained and must be located in a permanent position, although most lenders do allow for relocation as long as they are informed about it.
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