Mobile home loans are similar to traditional mortgages, but differences include the type of mobile home, whether the land is being financed, and the age of the unit. Down payments typically range from 5% to 10%, and personal property loans are an option for those who do not own the land underneath. Lenders are hesitant to finance homes over 30 years old without a permanent base.
A mobile home loan is a financing tool, by which a mobile home can be financed. A mobile home mortgage loan is similar in many ways to a traditional mortgage, 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 a factor in getting approved.
Although many people opt for 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 does not include land will often have different terms than one that does. One thing that should stay 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.
Generally, a mobile home loan will not be available on a unit that is more than 30 years old, especially if it does not have a permanent base. Lenders simply view the risk as too great. The average life expectancy of a mobile home suggests that they often don’t last much longer than 30 years. For this reason, a lender will be very hesitant to finance a home that is unlikely to outlive the life of the loan. In some cases, this can be overcome by getting a loan for just 15 years, instead of 20 or 30.
Another option for a mobile home loan is a personal property loan. This loan is specifically for mobile home buyers who will not own the land underneath. Such a situation is very common with mobile home owners because many sit on rented lots, or are often able to move from one location to another. The duration of these loans can vary somewhat from traditional mortgages. Often, the interest rates on a personal property 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 to agree to less than 5% will likely require the purchase of mortgage insurance. This insurance will repay the loan in the event of a borrower’s default. The required down payment percentages for a traditional home and a mobile home are very similar. Of course, the down payment for a mobile home will generally be more affordable since the cost of the home is generally lower.
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