A mobile home loan is similar to a traditional mortgage, but there can be important differences. The type of mobile home, age of the unit and whether land is included affect loan approval. Initial payments range from 5% to 10%. Interest can be higher than with traditional mortgages.
A mobile home loan is a financing instrument through which it is possible to finance a mobile home. A mobile home loan is similar in many ways to a traditional home loan, but there can be some very important differences. The type of mobile home, whether the land is being financed, and the age of the unit all play into getting approval.
While many people choose mobile homes because they are cheaper than traditional homes, there may be additional expenses that go along with financing. For example, a mobile home loan that doesn’t include land will often have different terms than one that does. One thing that should remain the same is that there should be a tax deduction for the interest paid, as long as the home serves as the taxpayer’s primary residence.
Usually, a mobile home loan will not be available on a unit that is more than 30 years old, especially if it doesn’t have a permanent foundation. Lenders see the risk as too great. The average life expectancy of a mobile home suggests they often don’t last much longer than 30 years. For this reason, a lender will be very reluctant to finance a home that is unlikely to survive the loan term. In some cases, this can be overcome by taking out a loan term of just 15 years instead of 20 or 30.
Another option for a mobile home loan is the personal property loan. This loan is specifically for mobile home buyers who will not own the underlying land. Such a situation is very common among mobile home owners because many sit on rented lots or can often be moved from location to location. The terms of these loans can vary slightly from traditional mortgages. Often the interest rates on a home loan will be higher than those on traditional mortgages.
Down payments for a mobile home loan typically range from 5% to 10%. Lenders will also accept larger down payments. Getting one that accepts less than 5% will likely require you to purchase mortgage insurance. This insurance will pay off the loan if the borrower defaults. The down payment percentages required for traditional and mobile homes are very similar. Of course, the down payment for a mobile home will usually be cheaper as the cost of the home is usually lower.
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