The prospects of refinancing your mobile home loan at a low rate

Buying a mobile home which is better known as manufactured home is one of the most affordable ways of owning a home by someone who is on a tight budget. The main big decision which makes a noteworthy difference in your monthly payments is whether or not to finance your mobile home with a mortgage or with a personal property loan. The latter are also called chattel loans and they have higher interest rates as compared to mortgage loans. For some owners of mobile homes, the option of refinancing chattel loans into mortgages could possibly reduce expenses of monthly housing.

Refinancing a mobile home – How can you qualify?

In order to qualify for a mortgage refinance for a mobile home, here are few criteria.

• The home needs to be on a permanent foundation which abides by the standards that are set by the Department of Housing and Urban Development.
• The homeowner needs to own the land which the mobile home is on. However there is a vital exception to this rule as well.
• The mobile home should be titled as real estate instead of personal property.

The striking difference of interest rates between the two types of loans

Few years back, 70% of all mobile-home purchase loans were deemed as high-price mortgage loans and majority of them are chattel loans, as per the Consumer Financial Protection Bureau (CFPB). The interest rates that you have to pay on chattel loans range from 7%-12.75% and these loans have repayment terms of 15 to 20 years. In contradiction to that, the average rate that you have on a 30 year fixed loan will be below 5%. A company which makes chattel loans says that the rates of interest are totally risk-based and they are the choice of borrowers who have poor credit score. For those homeowners whose manufactured homes aren’t on permanent foundations, chattel loans are the best option.

Obtaining a real estate title

A real estate attorney or a title company can assist you with title conversion as the initial step to refinance. Owners of manufactured homes have to offer:

• A title certificate to the home or a copy of the certificate of origin that is manufactured
• The deed to the land where the home is located with a permanent foundation

Once the owner has real estate title in his hand, the very next step would be to look for lenders who offer mortgage loans on manufactured homes. The rest of the process looks similar to closing a home loan deal on any other residential property.

What costs do you have to pay to switch title?

Whenever a mobile home is titled as personal property, the owner has to pay taxes on it. When it is given the title of real estate, the owner pays taxes in the real estate category. There are many states where property taxes can be higher.

Hence, as we see, refinancing is one of the most valuable things but it is not something important for everyone. To know more on mobile home refinancing, you have to understand the prospects of refinance before opting for it.