Buying a Mobile Home: What You Need to Know

Today’s companies manufacture homes at many price points, with options from economy to high-end. You can even purchase a home that  looks as if it had been built on site.

How to buy a trailer home, plus the hidden costs of buying a mobile home

Buying and financing a mobile or manufactured home is very different from traditional home buying and getting a mortgage. If you are thinking about buying a mobile or manufactured home, here is what you need to know, from the hidden costs of buying a mobile home to the ins and outs of buying a trailer home.

Types of mobile homes

Typically, mobile or manufactured homes give you the option of buying either single-wide or double-wide units. Some companies build triple-wide new homes, as well.

Companies manufacture single-wide mobile homes with a narrower frame. Inside, they manufacture rooms that are usually connected to each other rather than separated by hallways.

With a double-wide mobile home, the width is roughly equal to two single-wide units attached to each other, so that the mobile home tends to look more like a stick-built single-family residence.

When you buy a new mobile home, you also must buy or rent real estate where you can place your new home.

According to William Golightly, an associate with Poole Realty Inc. in Live Oak, FL, real estate sales and options to rent or lease vary by area.

In more rural areas, lenders commonly use “a land-home package” deal. This bundles private real estate with the purchase of your mobile home, so you make monthly payments on one mortgage.

In urban areas, many mobile-home owners rent or lease lots in mobile-home parks.

Buying a mobile home: Financing options

If you decide to finance the cost of your mobile or manufactured home or your land, the rules are a little different from those for financing standard single-family homes.

For a new single-wide mobile home, Golightly says financing is practically impossible through a larger private lender. However, you may be able to find finance through the mobile home sales company or through a credit union.

For double-wide homes, financing rules depend on the type of loan you choose.

For conventional loans, “Quite a few lenders have a self-imposed 15-year-old rule,” according to Golightly. This means that you may not qualify for a conventional loan if you’re considering buying a used mobile home that is more than 15 years old.

For government-backed loans, the mobile or manufactured home you are considering must be “original set.”

According to Golightly, when you buy a mobile home, it cannot “have been set up somewhere else and then later broken down, moved, and set up again somewhere else.”

The lender will also “require a foundational inspection from an engineer to make sure that [the mobile home] was set up to [Housing and Urban Development] specifications.”

Costs and insurance for buying a trailer home

For would-be homeowners who are tired of paying rent, purchasing mobile homes or manufactured homes can seem like an opportunity for home ownership at a price they can afford.

If they can’t afford their own lot, they can at least own their own home, while they pay lot rent to a park owner. They can generally afford a newer, more energy-efficient model in a mobile or manufactured home than any house they might find at a comparable price.

Since it generally costs less to buy a mobile or manufactured home than to buy or build a traditional single-family home, a mobile or manufactured home loan may also come with a lower down payment.

Many conventional loan programs have a minimum down payment of 5 percent, according to Golightly. Some government-backed programs may require even less.

For example, Golightly says, if you live in a rural area, with the “USDA Rural Development program, you could end up with 100% mortgage and have very little out-of-pocket expenses.”

However, your interest rate may be higher than other single-family home rates, since many lenders see mobile or manufactured homes as a higher risk.

How to buy a mobile home

If you get a mortgage on your mobile home, your lender is likely to require you to carry mobile-home insurance for as long as you have the loan. Similar to traditional homeowner insurance, this insurance protects you, and the mortgage holder, in case of natural disasters, damage from fire or loss from theft.

When you’re considering the cost of a mobile or manufactured home, don’t forget to factor in depreciation as an expense. Every type of home depreciates over time, but in the past, housing that was priced separately from land did not hold its value well.

Manufacturer standards improved post-1976, however, and new home buyers should expect the future value of their home investment to depend largely on its location, whether renting or with a home on its own lot, just like other real estate investments.