Mobile Home Loans: Types, Interest Rates & Best Options

Mobile homes can be difficult to finance. Mobile homes are more likely to depreciate in value over time than are traditional homes. This depreciation in value raises the risk for lenders writing loans for mobile homes. The result for mobile home owners is loans with higher interest rates than loans for traditional homes. To get the best loan terms possible, owners must carefully setup their home and maintain a high credit score.

Traditional Mortgage

A traditional mortgage is typically the best type of loan for a mobile home. Traditional mortgages offer longer terms and lower interest rates than other types of loans. However, lenders have strict guidelines as to the type of mobile home that will qualify for a traditional mortgage. Guidelines for issuing a traditional mortgage loan will vary between lenders. Mobile home owners should contact a number of banks and credit unions to determine which ones offer mortgage loans for mobile homes and the requirements for the home.

Personal Property Loans

The most common loan used to finance a mobile home is the personal property loan. These loans typically offer shorter terms and higher interest rates than conventional mortgage loans. A variety of lenders write personal property loans including banks, credit unions and finance companies. Many finance companies specialize in loans for mobile homes and may be the only choice for some mobile home owners. Buyers should shop for loans from a variety of sources. However, banks and credit unions typically offer better terms than finance companies on personal property loans.

Home Considerations

To increase the odds of qualifying for a traditional mortgage loan, home owners must take the proper steps to setup their homes. Lenders prefer mobile homes placed on a permanent foundations such as concrete slabs. Mobile homes placed on metal stands are less stable and may move during severe weather or settle, causing damage to the home. Lenders also look more favorably on homes placed on owned land opposed to rented lots. Even if not eligible for a mortgage loan, mobile homes on a solid foundation and owned land will typically be eligible for lower interest rate personal property loans.

Credit Worthiness

Mobile home owners with high credit scores and low amounts of debt will also be eligible for lower interest rate loans. This is true whether the loan is a mortgage or personal property loan. Before seeking a loan, mobile home owners or buyers should pull a copy of their credit report and review it for inaccuracies. Borrowers should have any incorrect information corrected by following the procedure of the credit reporting agency. During the loan process, borrowers should pay all bills on time and take steps to reduce debt.