How to Refinance a Manufactured Home

Difficulty: Moderate

Instructions

Things You'll Need:

Proof of Income and Personal Finance Records

Step 1

Determine your monthly expenses and compare it with your monthly income to figure out what type of house payment you can realistically afford each month.

Many lenders use 28% of an individuals monthly income to determine what an acceptable monthly mortgage payment would be.

It is important to take into account all living expenses, including food, utilities, car payments, credit card payments.
Step 2

Try to reduce your debt as much as possible. This means paying down credit card payments or other bills that will show up on your credit report.

When you apply for your mortgage, the lender will check your credit, so eliminating extra debt can offer a major advantage for a borrower.
Step 3

You may qualify for a Federal Housing Administration Loan, which is a federally run program that insures home mortgages.

The FHA offers Title I Manufactured Home Loans for up to about $50,000 for manufactured homes and about $64,000 for the home and lot.

There are several requirements regarding the condition of the home and they require a 5% down payment. These types of loans are also sometimes called HUD Mortgages.

HUD Mortgages are available for both new and used manufactured homes, with refinancing also available.
Step 4

Check to see if your state has any programs similar to the FHA. Depending on the location of the manufactured home, a number of states also offer rural loans, which can sometimes offer very favorable terms.
Step 5

Veterans may be eligible for a loan offered by the US Department of Veterans Affairs. These types of loans are referred to as VA Loans and have similar requirements to FHA Loans.
Step 6

Check with your local banks. Not all banks will finance a manufactured home, but there are some that do.

Most banks that do refinance manufactured homes have very strict requirements. For instance, they may require a higher credit score, a lower debt to income ratio, and a larger down payment.

Even if the bank doesn't finance manufactured homes, find out what their current mortgage rate is for comparison to other offers.
Step 7

There are a number of companies that specifically offer mobile home and manufactured home mortgages.

These types of loans often have less strict lending requirements, such as offering loans to those with less than perfect credit.

However, as a result of looser lending requirements, these types of loans frequently have higher interest rates and less favorable payment plans.

While the initial price offered by these types of companies might be lower, the rate will often increase quickly, so they can end up being much more expensive in the long run.
Step 8

Check the rates of several banks, organizations like the FHA, and lenders to compare prices.

It is very important to compare as many rates and offers as possible by requesting an estimate from the lenders. Many lenders will require an application fee to actually process the loan, but should offer a free estimate based off of information provided by the borrower.
Step 9

Watch out for subprime loans and avoid them if at all possible. Subprime mortgages are mortgages that have higher interest rates than other mortgages. The interest rate for a subprime mortgage is usually higher than the average market rate.
Step 10

Watch out for Subprime ARMs.

ARMs, or adjustable rate mortgages, became very popular over the last 15 years and have an interest rate that increases every few years. For example, the interest rate in a 2 year ARM would increase every 2 years.

Watch out for the percent of this increase as well as the maximum that the interest rate can rise to over the course of the loan.

A Subprime ARM will start out very low, but when the rate increases it can be very dramatic. Watch out for loans that increase by more than 1% every cycle.
Step 11

Determine what type of insurance the lender requires and if it can be included in the mortgage payment. Home Owners Insurance is almost always required, but some lenders will also require Private Mortgage Insurance.

Private Mortgage Insurance insures the bank against the borrower not being able to pay the loan and can often be removed after a predetermined amount of the loan is paid down.
Step 12

Verify the prepayment requirements of the lender. If the lender has a penalty for paying off the mortgage early, they should be avoided.

Also, check to see if there are added costs for extra payments, which can be a warning flag that it is a subprime loan.
Step 13

Find out how the lender handles late payments, how much is charged for late payments, and whether it effects the mortgage rate. Typically, a late payment should not automatically cause the interest rate to increase.
Step 14

Weigh your options. It is very important to consider all of your options and choose the best type of loan available.

Often, due to credit or debt concerns, many people end up taking out subprime loans, even though they could have often been avoided by exploring all available options.

Consider all of the above steps, as well as the down payment and your personal financial situation to determine the best lender.
Step 15

Before accepting a new mortgage, read all of the terms of the loan. These are often written in legalese, so it might be necessary to consult an attorney to help better explain the contract.