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How to refinance a mobile home in 2020

Erik J. Martin
The Mortgage Reports contributor

Refinancing a mobile or manufactured home is possible

If you own a mobile home or manufactured home, you probably already know that mortgage rules are different for these kinds of properties.

Some mobile homes can be financed and refinanced. Others can’t.

Your loan options depend on when your home was built, how big it is, whether it’s fixed to its foundation, and so on.

But if you can refinance your mobile home or manufactured home, you might stand to save big.

Current refinance rates are at three-year lows, and homeowners could save thousands. Find out whether you can refinance and save here.

Check your eligibility for mobile home refinancing (Sep 28th, 2020)

How to refinance a mobile home

Want to refinance your mobile home into a mortgage loan? If so, most lenders will require that your home be:

  • On land that you own
  • Affixed to a permanent foundation that conforms to HUD standards
  • Titled as real property (real estate)
  • Built after June 15, 1976
  • Without axles, wheels or a towing hitch
  • A minimum size (for example, 400 square feet)
  • HUD-compliant: It should have a HUD tag (metal plate certification label found outside the home) and a data plate (paper label found inside the home)
HUD Label for Mobile Home Financing and Refinancing

A mobile or manufactured home cannot be financed or refinanced without this HUD Label, which should be found on the outside of the home.

One of the biggest steps involved here is converting your personal property title to a real estate title.

This process is easier today in some states, including Virginia, Maryland, Tennessee, Nebraska, Illinois, Missouri, Alaska, Iowa, and North Dakota.

Converting your mobile home title into real property requires:

  • Certificate of title to your mobile home
  • Copy of your mobile home’s certificate of origin
  • Deed to the land on which your mobile home’s permanent foundation is fixed

“In addition, you’ll need a foundation certification performed by a licensed structural engineer,” explains Raymond Brousseau, Partner with River City Mortgage.

“Plus, the home needs sufficient homeowners insurance coverage to qualify for a mortgage loan.”

Check your eligibility for a mobile home refinance (Sep 28th, 2020)

Mobile, manufactured, modular home? It makes a difference for refinancing

Today, mobile homes are more often called manufactured homes or modular homes. In fact, the terms are interchangeable in the industry. But there are slight differences — and they can affect financing and refinancing options for your mobile home.

Brousseau explains:

  • A mobile home is a residence that has or used to have axles and wheels. It’s titled as a motor vehicle
  • A manufactured home is constructed entirely in a factory; it’s brought to the home site in one or more pieces
  • A modular home is mostly constructed in a factory, but it’s brought to the home site in multiple pieces to finish construction. Once built, you can’t move a modular home

If your home is still technically “mobile,” it cannot be financed or refinanced with a mortgage loan. If your home is fixed to its foundation and considered “real property,” it can likely be financed or refinanced.

If your home is fixed to its foundation and considered “real property,” it can likely be financed or refinanced with a mortgage loan.

Technically, a manufactured home built prior to June 15, 1976, is considered a bona fide “mobile home.” And those built after that date are considered manufactured homes.

Many mobile homes are permanently affixed to a foundation. These are much easier to refinance if you qualify. That’s because they’re titled as “real property.”

But mobile homes not permanently affixed to a foundation are usually titled and financed as “personal property.”

Refinancing a mobile home — mortgages vs. personal property loans

If you own a real property mobile home, you may currently have a mortgage loan.

If you own a personal property mobile home, you likely have a personal property loan. These are also called “chattel loans” — and they often come with higher fixed interest rates.

The Consumer Financial Protection Bureau reported that, a few years ago, around two in three purchase loans for mobile homes were higher-priced than mortgage loans. Many of these are chattel loans.

“If you rent the site your mobile home is on, often the only financing option is a personal property loan,” Brousseau says.

If you currently have a personal property loan, you’ll have to convert the title and the loan to a mortgage loan, if possible, in order to refinance at today’s mortgage rates.

The good news? If you meet the requirements, you can refinance either loan and likely take advantage of today’s lower fixed interest rates.

However, if you currently have a personal property loan, you’ll have to convert the title and the loan to a mortgage loan, if possible.

That way you can refinance into today’s mortgage rates — which are likely to be much lower than your current personal property loan rate.

That requires owning the land you’re on and setting the home permanently on a foundation.

Check your eligibility for a mobile home mortgage (Sep 28th, 2020)

FHA option for mobile homes on rented land

If you rent the land your mobile home is on, you’re still in luck. You may qualify for an FHA Title 1 mortgage loan if you:

  • Lease your lot from an FHA-compliant community or site
  • Have an FHA-eligible lease in effect
  • Live in the mobile home as your primary residence
  • Have your mobile home set on a permanent foundation

Keep in mind that many landlords and mobile home parks don’t comply with FHA mortgage standards. Also, it may be difficult to find a Title 1 mortgage lender.

When refinancing a mobile home is worth it

Today’s mortgage rates are ridiculously low. At the time of writing this (Early February 2020), rates are at their lowest in more than 3 years. Many homeowners will see big savings by refinancing at these rates.

That might be especially true for mobile/manufactured homeowners. Chattel loans have interest rates typically over 7%. Refi to a mortgage loan and you may get a rate below 4% according to the most recent Freddie Mac data.

That can save thousands over the life of the loan. Plus, if you pay private mortgage insurance, you could refinance and eliminate that if you’ve earned enough equity in your mobile home.

>> Related: The best refinance lenders for 2020

However, qualifying for a refinance can be costly. That’s especially true if you need to convert your title.

You may need to hire a real estate lawyer or title company for help with this process. Also, you may pay more in real estate taxes after converting your title than you would have paid for property taxes.

What’s more, setting your mobile home on a permanent foundation can set you back a few thousand dollars, Brousseau cautions.

And you’ll have to pay traditional fees associated with a mortgage loan—like closing costs.

Should you refinance your mobile home?

Crunch the numbers. And determine how much longer you’ll stay in your mobile home.

For many, this is a no-brainer decision: Refinance now and start down the path to greater savings.

If you’re not sure, talk with your current lender or prospective lender about options. Getting their input is free, and a professional can help you make the right decision.

Verify your new rate (Sep 28th, 2020)

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