I understood that financing of Modular homes is just like financing a stick built home because it is built to local building codes thus 30 year mortgages can be used. Manufactured (Mobile Home) is treated as personal property and usually has much less favorable terms/loan lengths with purchase.

My neighbors are being told that this is not the case by the local banks and are being pushed into 15 year programs, higher interest ect. They own the property free and clear, have a good credit rating and wish to replace the old mobile home with a new home. They keep running into the old bait and switch situation with the financing and are quite frustrated. Also they have been told that everytime they check with different banks that their credit rating takes a hit. Is this true?

If HUD considers a modular home eligible for 30 financing why on earth would my neighbors be told that the banks will only do a 15 year note? I would appreciate any advice or assistance you will share with me.

Manufactured homes whether modular or mobile can have another of guidelines and criteria.

Modular Homes are more widely acceptable than Mobile Homes converted to real estate.

Some secondary market lenders treat modular just like site built. Some do not.

Very few if any treat mobile homes converted to real estate like site built or modular.

They will need to continue their search for terms closer to what they prefer. They should not have everyone pull their credit. It in fact can hurt the score.

The reason the banks impose these pricing adjustments and restrictions is due to their risk of loss on that type of collateral. HUD only insures the mortgage against default. They do not entirely protect the lender or investor funding the mortgage against all losses. So, the lender has to adjust the requirements on this collateral to hedge the losses.

Thank you Greg for your reply. My neighbors wish to purchase a modular home built to UBS (stick built) standards. They own the property outright and have resided there in an older single wide mobile home while they paid off the property. They are very conservative and wish to keep the monthly payments well within their personal comfort level rather then what the underwriters say they can afford. Do you have access to programs for financing modular construction in Minnesota or can you recommend a company doing business in Minnesota? Again, I thank you for your assistance.

It will be difficult if the single-wide remains on the property. If removed it should be something that can be done. Construction is getting tougher to do these days. You may be better suited by seeing if the dealer will construct the home on the property then you could potentially pay them off with a USDA loan. It offers 100% financing.

If the single-wide remains on the property you will have to resort to contacting small banks who lend their own money. (Portfolio Lending)

If you were here, I'd say you'd have no problem getting a local bank to arrange a short term construction loan with the already owned land serving as the downpayment for a conventional loan which is put into place when the new home is completed and the old mobile sold (or other wise disposed of).

Their local Modular Dealer has probably dealt with this situation dozens, if not hundreds, of times in your area. He/She should be quite willing to suggest a local lender for the Construction Loan.

Thank you for your reply Dale. This is exactly the situation that is why I cannot understand what is going on. They are being told (by the banks and modular dealers) that there is no difference between modular built to UBC (stick built) and mobile homes. They want a conventional loan 80/20 LTV, have good credit rating and are getting the complete runnaround. They make to much money to qualify for USDA financing.

I have not seen an 80/20 for almost 2 years unfortunately. I also have not seen any construction loans, other than USDA, allowing any less that 10% down and more commonly 20% down.

You will need 20% down on a manufactured home though because none of the PMI companies will insure them. However like he explained above. The land can be used as the down payment if their is equity in it.

Did you use the USDA Income Eligibility Calculator to determine whether or not they would qualify based on their household income?

Remember there are 2 types of USDA loans. Guaranteed which is the link I gave you and Direct which is a low income/subsidized loan.

Besides for owning the land outright, these people (your neighbors) would also have equity in the water well, septic, transformer, landscaping, and any other site improvements. Don't they also own the mobile which is being retired ? They would certainly appear to have equity sufficient to satisfy the 80/20 criteria.

Something's not computing quite right.

I just missed out on a Commission because a local Professor got Tenure at a local College here and then decided that though he wanted to stay in the neighborhood where he owned a Doublewide (on a slab), he determined that it was no longer up to the standards of his station in life.

After working with him for a few months, he decided that instead of buying another house through me, he would get a construction loan, dig a hole on his existing lot, pour a foundation for a full basement, and plop a New Two Story Colonial Modular on it; which he tied into the same water, sewer, and all the other utilities as had serviced the Old Doublewide.

Then he traded in the Old Doublewide for $11,000, and got a new conventional 30 year Mortgage on the New Colonial. The Old Doublewiide was dragged away, (like an old cast off shoe) to become someone else's new home in a different location.

And the Professor is happy in his same Old Neighborhood, with the same Old Lawn and same Old Bushes and same Old People (aka Neighbors). I goot a little consulting fee out of the deal (plus rights to tell this story).

Your Friends/Neighbors should be able to pull off something similar.