Mobile Home Mortgage Rates, Terms, and Fees A complete
Mobile Home Mortgage Rates, Terms and Fees can
vary quite a bit. Depending on what lender you use, what type
of Mobile Home you live in,
and what type of credit and qualifying you will have.
The "term" of a loan means the length of time that
the loan goes on for.
Normal terms for personal property loans like these are 10, 15, 20, 25,
and 30 years.
There are two ways a loan can be set up:
First, there is FIXED rate.
This is where there the rate is fixed for the whole term.
These loans are usually higher in rate and you
need to closely compare the over-all cost in interest that you would
pay on this loan, vs. an adjustable rate loan.
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terms, and fees. They even have a fully fixed 25 year loan
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Second, there is Adjustable rate.
This is where the rate is fixed for a period of time, then adjusting to
Let's say 5 years again, but the payment each
month pays all of the
interest and enough principal to get the balance paid off by the end.
Third, there is an adjustable loan.
This is where the rate is fixed for a short period, then it
Let's take the 5 years again. In this
case you would have 5
years fixed rate. Then, you would adjust once a year to an
index rate plus a small margin. This looks like this:
Index of Prime Rate (3.25% currently), plus a margin of 1.00%
- thus, a fully indexed rate of 4.25%.
There are different levels to choose from usually
- 5 year fixed and 10 year fixed are the most popular. There
are also now 20 year loans that start at a low fixed rate, like 4.50%,
for the first 5 years, then go to a higher rate that is preset, like
7.50% for the remaining 15 years.
A person would choose this option when the other
rates and terms are not so favorable.
Mobile Home mortgage rates can vary quite a bit
from lender to lender, and from area to area. The lowest we
have seen is 4.50%, and the
highest is approaching 10%. Typical rates are
in the 5.50% to 7.50% range,
and if you are
quoted higher then ask why and keep shopping around.
Why is there such a difference in the high and low rates? And
what are the
factors that determine the rate?
First, you must realize that rate is a gauge of risk -
the higher the
default (non-payment), the higher the rate.
Second, rates charged are also based on the cost of money at any one
time in the nation (market rates).
So, Mobile Home mortgage rates will reflect the
risk in any one area,
with also reflecting
cost of money.
Mobile home mortgage rates are based on risk of default by these
Good vs. bad credit
loan amount compared to the value
income vs. debts monthly
Age and size of the unit (we address this
factor separately below)
These should be obvious, but lower rates are
available to people who
have: Better credit, more equity, low debts each month.
Off setting factors are considered when
determining a Mobile Home mortgage rate, such
Additional reserve assets (lots of money in the
bank and/or additional
other properties), very stable employment, other income not used to
Here is an example:
A retired couple have just enough money saved for the down payment and
costs. Their income is about twice as much as their house payment,
space rent, and credit card payments each month. Their credit
is ok, but
there are a few late payments on their credit report in the past year.
A retired couple who are putting down 50% of the
purchase price, they
money in the bank to pay off the remainging balance if needed, and they
There is more risk with the first couple so their Mobile Home mortgage
rate will be
your current income vs. debts each month, consider what you equity
be, and consider how you have paid your debts in the past (especially
the last two years - this period matters the most).
Age and Size factors for determining rate:
This too should be obvious, but the newer and
larger the unit, the more
it is to most people. A lender will look at the risk as if it
were to foreclose on the property in the case of default and need to
sell the property on
market. They require a property appraisal for this
reason. An older single wide is harder to sell than a new
double wide - therefore the risk is higher
on the smaller, older units - which means a higher rate.
Typical cut off for a lot of lenders is 1976 for
the year of
manufacture. This is
due to the HUD building requirements established at that time. However,
this is not
a hard and fast rule - just the norm. Our recommended lender
in California will finance all years, all the way through 1970.
For most people with good credit, a down payment
of some sort, and good income (also being able to prove their income)
should not pay more than 1.75 points origination fee and normal closing
costs. One point is one percent of the loan amount.
Why are points charged?
In Mobile Home financing, there is no "market" for
the loans to be bought and sold on between lenders and investors.
So, all the loans that are made must be held by the
institutions that made them (in some cases the loans are sold, but this
is rare). What this means for you is that there is no
possibility for "no points". Any lender is in the business to
make money, that is it. They will not give away the loans,
they are in the business of selling the money.
Yes, there is a lot of money made in the interest
rate, but a lender will divide up the proceeds as up front profit and
over-time profit. They cannot "count" on the over-time part
because there is a chance that the loan will pay off early or not pay
at all. So a lender MUST charge up front fees to stay in
business (all those people working on your loan need to eat).
Mobile Home mortgage rates, terms, and fees will
be worst if you have bad credit or stated income.
Additional closing costs to consider:
In addition to the lender fees, there will be
escrow, title, appraisal, and notary fcosts to pay. For a
purchase, you will also have insurance, taxes, inspection, and termite
costs. Buying and financing a Mobile Home is very expensive. By Will
Something to keep in mind:
Mobile Home Mortgage rates, terms, and fees are all
now not negotiable - so don't be surprised if you ask for discounts
that you are told no. The government has basically said that
everyone should pay the same and no one can get a better deal than
Additional Manufactured Home Info
Here are some related topics, click on the
underlined words for more information.