So, you’ve decided a manufactured home is the best choice for your needs—how will you pay for it? While manufactured homes offer a safe and attractive option for a fraction of the price, they’re still not cheap. To make sure you can afford your home, financing is the most common choice. Not all mortgages are alike, however. They vary depending on the lender, interest rate, and borrower, so you must research. You will want to avoid some widespread but preventable mistakes when securing a home loan. Read about the most common mistakes to avoid in home financing.
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Going With the First Lender
One of the most critical steps in securing a loan for your manufactured home is to shop around and compare lenders. Not all lenders are the same. They may offer similar programs or interest rates, but some will be a better choice than others for your situation. Lenders will want your business, but they should allow you to shop around to compare rates and mortgage types. You may go with the first option you found, but it should be only after you’ve determined they have the best rate and mortgage for your needs. Some lenders may offer more attractive rates and loan types for your manufactured home’s location or status.
Not Knowing the Best Rates
Interest is the cost of borrowing money to buy your manufactured home. While the federal government is responsible for the general interest rate, this number can fluctuate depending on the lender and mortgage type. You’ll want the lowest possible interest rate you can secure, so you’ll pay less for your loan overall. You’ll need to know a reasonable rate to get a good rate. Learn the average interest rate nationwide, in your area, and for your income. Some homebuying programs or mortgages focus on a lower interest rate to increase affordability. Your lender should help you apply for everything possible for the best rate. Do your research! It will be worth it to save money.
Ignoring Homebuying Programs
Suppose your manufactured home purchase will be your first home. In that case, you will want to look into your city or state’s homebuying programs. Many areas have first-time homebuyer programs that offer grants or deferred loans to help with down payments and interest rates. Some homebuying programs are provided to people with a certain income level or community status. Your lender can walk you through different programs. Still, you’ll be more informed if you research your options, too—lenders may not be current on all the possibilities.
Unfamiliarity With Different Mortgages
Many kinds of mortgages are available to make homeownership more accessible, especially if you’re buying a manufactured home. Not understanding the types of mortgages beyond the traditional can cause you to miss out on many savings in some circumstances. Suppose your manufactured home is in a rural area, for example. In that case, you may qualify for a USDA (United States Department of Agriculture) loan at a more attractive interest rate. Suppose your income falls under a certain threshold. In that case, you may qualify for better rates through an FHA (Federal Housing Administration) loan. Military members and families may be able to secure a VA (Veteran Affairs) mortgage.
For self-employed buyers and 1099 earners who can’t document income with W-2s, a non-QM bank statement mortgage can be a smart alternative. With programs that use 12–24 months of deposits to calculate qualifying income, the Griffin Funding bank statement program explains how these loans work, current rate ranges, and typical requirements.
Some mortgage programs are state-specific, too. You’ll need to research your area’s options well to know what to choose from, like these examples.
Charlotte, North Carolina
Charlotte is a great place to live, with plenty of affordable manufactured home communities. Mortgages like the NC Home Advantage can help homebuyers with down payment assistance or attractive interest rates, making it easier to afford a home.
Orlando, Florida
Orlando has a notable demand for affordable manufactured homes due to the many retirees and families of all incomes. You’ll want to know which mortgages work best in a large city like Orlando. Florida offers many homebuying mortgage programs that lower down payments and interest rates.
Phoenix, Arizona
Phoenix is a large southwestern city known for its decent healthcare, stunning views, and thriving economy. With promising residential suburbs like Sun City, manufactured home buyers have plenty of opportunities. Arizona is the mortgage state—you can secure a deed of trust or a mortgage to use as a home loan. Homeowners can also utilize their property value to secure funds—called a reverse mortgage—and manufactured homes can qualify. To be eligible for a reverse mortgage in areas like Sun City, a manufactured home must be on a foundation to fit the legal definition of housing. Regardless of what type of housing you’re looking for, Arizona has plenty of financing options.
Skipping Pre-Approval
Pre-approval is a great way to know your housing budget and your qualifications to secure the loan. When you skip pre-approval, you won’t know what houses are out of your price range, and sellers may not know if you’re qualified for the mortgage you want. Pre-approval doesn’t guarantee you’ll get the loan, but it’s an effective tool for home searching and buying. Don’t skip it!
Avoiding a Home Inspection
Some mortgages are only available contingent on home inspection results. You may lose your home’s funding if you don’t want to pay for a home inspection. Manufactured homes can vary in quality, and if previous owners have not cared for the structure, it may have severe defects that can affect your financial or physical health. Home inspections may cost more upfront, but you may not be able to buy a home without one. It will also offer peace of mind that you’re not about to buy a money pit instead of a home.
Shopping for Homes Yourself
There’s nothing wrong with peering at online home listings in your area—we’ve all done that. However, suppose you think it’ll save you time and money to shop for a home entirely yourself without an agent. In that case, you may want to consider that decision thoroughly. Real estate agents do more than just look for homes for you—they know the best professionals to help you buy a safe home with great success. They’ll also be able to make competitive offers promptly and professionally. Agents are equipped with knowledge most homebuyers don’t have to make the process as easy as possible—consider getting one.
Conclusions on the Most Common Mistakes to Avoid in Home Financing
Getting a mortgage for your manufactured home can be intimidating. Still, it can be relatively straightforward when you’ve come equipped with research. You don’t need to be an expert on mortgages or homebuying. Still, when you research average interest rates, homebuying programs, and lenders in your area, you’re off to an excellent start.
Featured photo: actionphoto50. Source: depositphotos.com
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