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Previously manufactured homes are known as mobile homes, and they are an important source of affordable housing that buyers can customize to suit their needs and financial situations. Although they are more affordable compared to traditional homes, you can still score stoves, wardrobes, and stainless steel appliances. However, there are many rules and regulations associated with it.
Here’s what you need to know if you’re considering buying a manufactured home.
What is a manufactured home?
Unlike traditional stick-built or on-site homes, which are built piece by piece directly on the site where they will stand, manufactured homes are built in a factory before being moved to the site the homeowner plans to live in.
The term manufactured home specifically refers to any factory-built home built after June 15, 1976. That’s when the US Department of Housing and Urban Development (HUD) set stricter guidelines about how mobile homes and other factory-produced homes can be. Created.
Unlike traditional building codes, the HUD Code requires manufactured homes to be built on a permanent structure (a wheeled primary frame) and be at least 320 square feet. Once delivered to the final site, the wheels are removed and the structure is placed on piers, masonry crawl spaces, or a concrete foundation.
With a lower cost of materials, a faster construction schedule and greater energy efficiency than chip-built homes, manufactured homes are cost-effective and can be a great option for buyers on a budget. In fact, they are priced between 10% and 35% less per square foot than traditional homes. Additionally, despite some of the old negative stereotypes that still exist for manufactured homes, studies show that they generally retain or increase in value over time.
Manufacturer vs mobile home
Mobile home refers to manufactured homes that were produced before June 15, 1976. As the name suggests, these homes can be moved. Mobile homes received a bad reputation thanks to early models, which were often not built with quality in mind and their value quickly depreciated.
Mobile homes have come a long way since then, however. Today, modern mobile homes are not meant to be moved more than once. Structurally, it is also safer and more comfortable. In fact, mobile homes offer a variety of floor plans and amenities, including fully equipped kitchens and spacious bedrooms.
New mobile homes built after June 15, 1976 are officially referred to as manufactured homes, although they are still often called mobile homes. Mobile homes built before this period are not considered manufactured homes, even if upgrades were made.
Modular home vs. manufactured home
Modular houses are also manufactured in the factory. However, they are built in sections, which are then transported to the site and fastened together on a permanent basis. It is very rare for the house to be moved again. These types of homes do not have to meet the same HUD standards as manufactured homes, although they must adhere to the same federal, state, and local building codes as site-built homes.
How to buy a manufactured home
You have a few options when it comes to buying a manufactured home. In general, it is like buying a car. There are retailers that specialize in these properties, and you can buy new or used homes. It is also possible to arrange financing through manufactured home dealers, as well as customize the home with a wide range of amenities. Usually the agent also coordinates delivery and installation.
You can also work with a real estate agent to find manufactured homes for sale, or browse property listings on manufactured home markets. In some states, you can also buy directly from the owner.
The cost of the manufactured home
The cost of your manufactured home will depend on a few things. For one, the actual home cost can range depending on the size of the home. For example, you can select a single, double or triple width floor plan and up to several rooms if you wish.
According to April 2020 data, the average cost of a new factory single-storey house (about 500 to 1,200 square feet) was $64,500, while the average cost of a new double-storey house (about 1,000 to 2,200 square feet) was $120,300.
Keep in mind that the actual home isn’t the only cost you’ll incur. You will also need to buy or rent the land on which it is located. If you rent space in a motorhome park, you are responsible for paying the monthly rent plus utilities and shared utility fees. Rental costs vary by location; In Missouri, you can expect to pay as little as $185 per month, while in California, the average rent is $707.
You also have the option to purchase a plot of land independently. Again, the cost of the land will be highly dependent on the location and nearby facilities. However, nationwide, one acre of land is worth about $12,000 on average.
How to buy a property for a manufactured home
If you decide to purchase a property, it is necessary to first check the local zoning restrictions for these types of structures. There may also be land use restrictions, which may dictate the size of the home or prevent you from using it to run a business.
When evaluating the property, you should also consider the ease of access to the site, the various permits required, the quality of the soil, and the amount of work required to prepare the area and foundation.
If you are interested in purchasing a plot of land for standard living, you may be able to find space in a residential neighborhood. However, if you are looking for more outdoor space, it may be a good idea to explore land options in the hinterland.
If you need financing for your purchase, you have two options. The first is to obtain a loan for the land and a separate loan for the factory house. However, this may be less convenient, as you have to qualify for two different loans and manage two payments. The other option is to take out a loan that includes land and property.
Types of manufactured home loans
Unless you have a large amount of cash on hand to purchase a fully manufactured home, you will need a loan to cover the full cost. Manufactured home loans can be tricky depending on some factors, but you have many options to choose from.
It is possible to purchase a manufactured home using a conventional mortgage loan if it is considered real estate. Your home must have a surface area of at least 400 square feet, be attached to a permanent foundation and have all essential features needed for living, including eating, sleeping and sanitation.
There are two traditional mortgage loan options for manufactured homes:
- MH Advantage Program: This is available through Fannie Mae – one of two (along with Freddie Mac) federally backed mortgage companies that buy and guarantee mortgages issued by lenders. This option allows you to repay as little as 3%, although you must have a credit score of at least 620 to qualify. Only certain properties are eligible and will have an “MH Advantage” label affixed to them by the manufacturer.
- home program: Freddie Mac also offers conventional mortgages for homes manufactured under the CHOICEHome program. You can pay back less than 5% as long as you have good credit and use the loan for both the primary and second home; Investment properties are not eligible.
Government backed loan
It is also possible to qualify for a manufactured home loan through the US Department of Veterans Affairs (VA). If your manufactured home is considered real estate, you can use a VA loan for several purposes, including:
- Buy or refinance a manufactured home
- Buy or refinance a manufactured home plus lot
- Buy and improve a lot for your existing mobile home
- Refinance a manufactured home to buy a lot too
The United States Department of Agriculture (USDA) also offers loans for home purchases. The home must be considered real estate, of at least 400 square feet and permanently fixed to an establishment to qualify. To qualify for a USDA loan, the location must also be considered rural according to USDA guidelines, and the home must be less than a year old.
If your manufactured home is mobile (has wheels) or if you pay a fee to your state’s Department of Motor Vehicles, it is considered personal property, not real estate. In this case, you will not be able to qualify for the above loans. Fortunately, you may be able to secure financing for a manufactured/mobile home through the Federal Housing Administration (FHA).
You can use Title I FHA loans to purchase or refinance a loan and/or a manufactured plot of land. The home must be your primary residence. Loan amounts are limited – the limit depends on whether you are financing a home only (up to $69,678), a lot (up to $23,226) or both (up to $92,904).
Chattel . loan
Chattel loans are similar to car loans in that the manufactured home acts as collateral — something valuable that the lender can get back if you fail to pay or default. You need at least 5% to qualify. Mortgage rates tend to be higher than traditional mortgage loans, and they often come with shorter terms and smaller loan amounts.
A property loan—which is intended for movable property such as manufactured homes or airplanes—may be a good option if you don’t plan to purchase the piece along with the home, as is the case when buying in a manufactured home community. The loan remains the same even if you end up moving the house.
Merchant or owner financing
Finally, you may be able to arrange financing directly through the person or entity you are buying from. If you purchased your manufactured home through an agency, it is very likely that they also offer financing (often referred to as a retail installment contract).
If you purchased a home from a private seller, you may also be able to strike a direct financing deal with them. Just make sure the seller fully owns it. If you go this route, make sure the loan terms are completely clear, on paper and signed so you don’t get into any confusion or disagreements in the future.
Pros and cons of manufactured homes
Not yet decided if a manufactured home is right for you? Here is a brief summary of the main pros and cons to consider.
Advantages of manufactured homes
- It is usually affordable: Modular homes are often much cheaper than slide homes. It’s also easy to customize a home to fit your own budget and lifestyle needs. Today, it is possible to purchase a manufactured home that has all the comforts and conveniences of a traditional home for a fraction of the cost.
- Efficiency make up: Manufactured homes can be built and installed quickly. The construction process is also simplified, allowing for fewer errors, damages, and delays. Manufactured homes are also highly energy efficient thanks to the HUD code, which requires that they be built with energy-saving features.
- They are versatile: Manufactured homes make great starter homes that you can always expand on later. As your needs change or your family grows, it is possible to add modules. And while most manufactured homes are no longer meant to be mobile, it may be possible to move your home to a different location in the future.
Disadvantages of manufactured homes
- It can be difficult to secure financing: Not all manufactured homes qualify to be real estate property, which means you may not be able to secure a traditional mortgage or a factory home loan. You may end up paying higher interest rates to finance the purchase of a manufactured home.
- There are site restrictions: Manufactured homes do not come with much stands for them. To live in your home, you will also need to secure a plot of land for him, whether it is a manufactured home community or a standalone plot. This means additional costs over the home.
- Negative stigma: There is still a negative connotation for manufactured homes and parks, even though the safety and beauty are miles away from what they were several decades ago.