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Everything You Need to Know To Refinance a Manufactured Home
If you own a manufactured home and would like to refinance your loan, there are some unique factors to consider. The decision to refinance your manufactured home loan should be made based on your personal financial circumstances. Here are some things to consider when deciding whether refinancing your manufactured home is right for you.
Refinancing requirements
Not every manufactured home can be refinanced. Make sure you meet these requirements:
- You own the land that your manufactured home sits on
- You pay real property taxes on your manufactured home
- Your manufactured home has a permanent foundation with required Housing and Urban Development (HUD) components
- Your home is not mobile with at least 400-600 sq ft of living space
- Your home was manufactured after June 15, 1976 and complies with all safety requirements
Types of refinancing available
Once you determine you can refinance, there are two types of refinancing typically available – a cash out refinance and a limited cash out refinance.
- Limited cash out refinance – this option allows the homeowner to replace the existing loan with a new loan. However, you will still need to pay closing costs, or roll the fees back into the monthly payment. With a limited cash out refinance, the cash back is limited to 2% of your manufactured home. If you are financing the manufactured home and the land it sits on, you can include both in a refinance.
- Cash out refinance – if you have owned your manufactured home for more than 12 months, then you qualify for a cash out refinance. With a cash out refinance loan, you also replace the existing loan with a new one in an amount that is greater than the previous value. You can keep the difference between the two loans and use that cash.
If you are leasing the land where your home sits and it is mobile home, you may qualify for a chattel or personal loan financing.
Who Refinances a Manufactured Home?
Your manufactured home dealer or original lender is a good place to start when considering refinancing a manufactured home. In addition, Freddie Mac, Fannie Mae and the Federal Housing Administration (FHA) also offer refinancing programs for manufactured homes.
A traditional bank or lender can offer a fixed-rate mortgage, an adjustable rate mortgage or a conventional loan. Each type of mortgage has specific components so use a mortgage calculator to determine which is best.
The FHA offers refinancing on manufactured homes that meet HUD guidelines. A Regular FHA loan requires a low credit score and offers low down payments. A FHA Title I loan could be an option if you rent the land your manufactured home sits on. A FHA Title II loan is available for those with a low credit score.
Other government entities including the United States Department of Agriculture (USDA) and the Veterans Administration (VA) also offer programs for refinancing manufactured homes.
We are here to answer your questions!
Q: Is it easy to refinance a manufactured home?
It depends. There are certainly required steps when refinancing a manufactured home.
Q: Why is it so hard to refinance a manufactured home?
Refinancing a manufactured home requires the same steps needed to secure the original mortgage. If you have your paperwork in hand and have used a mortgage calculator, you should be prepared to meet with a lender who can advise you on the best options.
Q: Can chattel loans be refinanced?
Yes, a chattel loan, or security agreement, can be refinanced. But the typical terms are much shorter and the interest rate is higher.
Q: Does FHA allow cash out on manufactured homes?
No. HUD 4000.1 regulation prevents lenders offering an FHA loan to lend money.
Q: What is the best refinance company for a manufactured home?
The best company to refinance your manufactured home depends on your individual circumstances. Research your options, use a mortgage calculator and have your paperwork in order to find the best option for you.