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October 10, 2022

Buying A Mobile Home by Yourself? Here’s What to Know.

Homeownership is the American dream. Owning a mobile home offers stability, whether you have a family of five or you are a single person. Our mobile home dealership in Odessa often works with single people to invest in their first home. If you are buying a manufactured home by yourself for the first time, here are some considerations.

Financing Your Mobile Home

When you are in a single-income household, financing is one of the top concerns for buying a mobile home. Fortunately, there are a variety of options when it comes to financing a mobile home. Our mobile home dealership in Odessa works with many people concerned that they will not qualify for a mobile home loan because they only have one income, but that is not necessarily true! 

Here is a brief overview of the different types of loans that you may be able to use to purchase a mobile home: 

Chattel “Home Only” Option

These are the most common type of mobile home loans. You may need a chattel loan if you don’t own your home’s land. They are often a great option for single people shopping for mobile homes. They usually have a slightly higher interest rate and a shorter loan period than a mortgage loan. The shorter payback time reduces the actual dollars paid to the bank as interest; plus, it makes your home free and clear sooner than a more extended loan period. With a chattel loan, you don’t need to pay for private mortgage insurance (PMI). Since you are spending less upfront, your down payment will be less (often much less) than if you needed to finance a home and the land, not to mention the freshwater, sewer or septic, electric, and gas connections. The smaller down payment makes it easier for many people to get into homeownership with a chattel loan than other loan types.

Finally, you can put your home in a mobile home community that offers more amenities than you may be able to afford if you placed your home on your land. This also offers the option to connect with a community for single people. 

Conventional Mortgage “Land and Home” Option

This mortgage is going to the bank to finance the mobile home, the land, and the land improvements. These types of loans generally offer the lowest interest rates. The downside to a conventional mortgage is you usually need a larger down payment to get this type of loan, which can be difficult to come up with a single person buying their first home. Since the down payment includes the land and land improvements, a typical down payment can run you tens of thousands of dollars, depending on the land and the home you choose. A conventional loan is usually better for people who are buying their second or third home, where they can apply the equity in their old home toward the purchase of a new home.

Land-in-Lieu Down Payments

If you own land, you can use the value of the land toward your down payment. Your land will need to appraise high enough to meet the down payment threshold the bank wants, but you may not need to come up with additional cash for your down payment. 

Government Options: USDA, FHA, VA

Government loans, such as FHA and VA loans, are very similar to conventional loans in that they buy the land and the home together. Government loans usually require a much smaller down payment than commercial loans, and with the VA loan, the down payment may even be $0. The downside of a government loan is there are more requirements and restrictions than commercial loans, plus the interest rate will often be a little higher than a conventional loan. If you put down less than 20% on the home, you will also likely have to pay for private mortgage insurance (PMI). Finally, be prepared for the approval process to take a few extra weeks with a government loan.

Private Lender

You can also utilize your bank or private lender for a mobile home loan. Generally, your lender will be your favorite bank or a friend or family member who wants to loan you money. The advantage of using your bank is convenience and that you already have a built-up relationship. The only disadvantage is if your bank does not typically handle loans for mobile homes, you may find getting approved for the loan harder than with our lenders, higher deposits may be required, and possibly even a higher interest rate may be assigned to your loan. Just watch the details when you go through the borrowing process. Borrowing from a friend or family member is often offered at lower interest rates or smaller down payments. When borrowing person-to-person, we recommend hiring your attorney to review the documents to ensure the loan arrangement is fair, no matter how much you trust the loan. 

Cash Deals

If you already have the money in the bank for a mobile home, we call it a “cash deal.” Many customers at our mobile home dealership in Odessa choose to bring a check and pay for everything upfront. 

Placing Your Mobile 

Another consideration for buying a mobile home on your own is where you would like to place it. If you want to invest in private property or you already own a piece of land, you can create your oasis away from the world. However, others will want to stick close to neighbors so a mobile home community can be a wonderful option. As mentioned above, mobile home communities are a great way for single people to receive amenities they would not otherwise, like swimming pools and dog parks. However, if you go this route, keep in mind that there will be fees associated with joining a mobile home park. 

Moving Your Mobile Home in the Future

If you are single now, there may come a time when you decide to live with others, whether a romantic partner, family member or friend. Because things can change, mobile homes are a great, flexible option for single folks. Mobile homes are significantly easier to move than stick-built homes, so if one day, you decide to move your home to a different property, you can do so with relative ease.

We hope this blog helped you! If you have more questions, our mobile home dealership in Odessa would love to help. Contact us today to get started. 

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