Since Congress passed the Manufactured Housing Improvement Act in 2000, the quality of manufactured houses and the codes that govern their construction are up to date and much improved. Manufactured houses have always been associated with affordable housing for the low-income, but today, the industry estimates that over half of new purchases of manufactured houses are by middle-class retired persons. Regardless of your current situation, there are some aspects of purchasing manufactured houses that every potential buyer should know.
As tempting as it might be to purchase from a dealer who offers package deals on manufactured houses, you should avoid these deals if you can. Typically, if a package deal offers site, construction, financing, and delivery and installation all in one, you are going to pay a higher price than if you addressed each aspect separately. Before you enter into a deal of sorts, you should check to see what interest rate you are getting on your loan, what you are paying for the site, and what delivery and installation is going to cost you. Then compare prices elsewhere to see if you are really getting a good deal.
Financing of manufactured houses can be tricky. Mainstream mortgage financing does not always apply to manufactured houses, especially because even if they sit on their destination site forever, they are still considered mobile. Mainstream funding for manufactured houses can be obtained, but you will have to meet certain requirements.
First off, if you are able to purchase a lot or site outright, then you will be increasing your odds for obtaining mainstream financing. If you can’t afford to purchase a lot or site outright, then you need to be willing to sign a lease with a landlord for at least a five year period to reduce the risk of default in the banker’s eyes. You will also have to adhere to specific installation processes outlined by the conditions of the mortgage loan. Manufactured houses must be permanently affixed by anchors to a concrete foundation before they qualify for mainstream funding.
It’s true that you don’t have to use mainstream mortgage financing to buy manufactured houses, but you will save a considerable amount on interest and fees if you are able to. The alternative is comparable to a personal loan with no collateral and thus will carry a much higher interest rate.
Another important factor to consider when purchasing manufactured houses is warranty. While the manufacturer must carry their own warranty, you want to make sure that if a dealer is packaging installation with the purchase, that their installation also carries a good warranty. A dealer offering a package which includes installation and financing, but no warranty is a bad sign.
If you are unable to secure better financing because of credit problems or other factors, you might have no choice but to take a dealer up on their best package offer, but you can still negotiate. Perhaps the dealer can extend a warranty, offer a free upgrade or some other perk. The best thing to do is to take the time to think the entire purchase through and make sure you are getting an acceptable offer that you can afford.
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