Information on Refinancing a Mobile Home

Refinancing a mobile home may be difficult.

Mobile home owners may refinance their home loans to take advantage of lower interest rates or longer loan terms. Though more lenders will write loans for mobile homes than in the past, lenders still look at mobile home loans differently than mortgage loans for traditional homes. Understanding how lenders view mobile homes and how they use information to make lending decisions will allow borrowers to obtain better loan terms.

Home Requirements

Lenders prefer to write loans for mobile homes placed on permanent foundations. Mobile homes on permanent foundations are less likely to settle or otherwise move, which may damage the home and reduce the lender's collateral. Mobile home owners who own the land under the home, as opposed to renting it, will also find refinancing easier. Owning the land under the home helps to reduce the risk of property depreciation, which makes writing the loan more risky. While it is possible to get loans for homes that do not meet these conditions, it will be more difficult and the loan terms will not be as favorable for the borrower.

Borrower's Credit Standing

Lenders use a variety of measurements to determine a borrower's creditworthiness, but the borrower's credit score is one of the most important. Borrowers with lower credit scores will find it easier to get loans and will receive better loan terms. Before seeking a refinance, a mobile home owner should request of a copy of his credit report, examine it for any inaccuracies and have them corrected. Owners should pay all bills on time, reduce their debt level and refrain from opening new lines of credit during the refinance process.

Types of Loans

Personal property loans are the most common type of loan for a mobile home. These loans typically have higher interest rates and shorter loan periods than a traditional mortgage, making the mortgage loan the better loan type for borrowers if it's available. The interest rate on a personal property loan may be a few points higher and loan length is often 10 to 15 years instead of 30, as with a mortgage loan. A mobile home placed on a permanent foundation and owned land is more likely to receive a traditional mortgage loan.

Lenders

Many banks and credit unions will offer loans for mobile homes. Banks and credit unions typically offer the best loan terms for mobile homes that meet their lending guidelines. There are a number of finance companies that offer loans for mobile homes and these companies typically have less stringent lending requirements than banks or credit unions. These companies typically only write personal property loans and at higher rates than similar loans from banks and credit unions.

References

• Bankrate: Financing a Manufactured Home; Vikki Ramsey Conwell; July 22, 1999
• U.S. Department of Housing and Urban Development: Financing Manufactured (Mobile) Homes
• Consumers Union: Consumers Union's Tips on Mobile Homes