1. A mobile home is also called a manufactured home. Both are the same in the eyes of the lender. It is considered a property that is not secured to the ground.
2. Without the mobile home being secured to the ground it becomes a huge risk for any mortgage company. The mortgage companies do home loans that are leveraged against a “secured property.” A mobile home or manufactured home is not.
3. Since the mobile or manufactured home is not secured to the ground the investors that give the money to the mortgage companies say in their guidelines that they will not allow them to write any loans on such a property.
4. If you own a mobile or manufactured home and are looking to refinance your property you should always be upfront about the type of property it is. Many mortgage companies will collect a deposit at the time of application to cover the costs of the appraisal. As long as everything goes well then they will give you the deposit back at closing or credit it to your closing costs (no such thing as a mobile home loan with no closing costs). If you do not tell your loan officer that the house is a mobile or manufactured home the appraiser will come to your home, do the appraisal and send it back to the mortgage company. As soon as the appraisal gets back the loan will be declined. Some appraisers will call the mortgage company up and tell them that its a mobile home before they do the work. Some will not because they assumed that both parties know this. You cannot blame the appraiser because they are there to work.
5. After the appraisal gets back in and you are told that you cannot get a loan from them you will probably spend the next hour going back and forth about trying to get your deposit back because nobody told you your property was ineligible for refinancing. Depending on the company some will give it back and some will not. Best thing to do is to ask the loan officer up front if they refinance mobile or manufactured homes. Most of the time the loan officer will ask you these question because its a part of their sales process.
6. A major reason why the larger mortgage companies do not refinance mobile homes is because they are, well, mobile. Let’s say that they did refinance your manufactured home and then 6 months later you found a new piece of property in the next county that looks over a lake and has twice the amount of property. Let’s call it your dream property. You decide instead of building you are just going to hook the mobile home to the back of your Ford F-350 and trailer it down to your new property. You place the mobile home right were you want it and life is good.
7. Life is not good for the mortgage company because they did your home loan based on the lot where you use to live. Mortgage companies appraise the value of the home and the lot. Without a structure on the site the property is probably worth 60% less now. They hold a mortgage on the property you use to live on. You are technically still on the hook for the loan but you say to them “I don’t live there anymore.”
8. Since you decided to just pick the mobile home up and go the bank can only really foreclose on the lot. The mortgage note is registered with the county and state on that property. They cannot transfer the note to your new lot. This is against the law.
9. Now the mortgage company cannot sell the property for what it was initially worth because the mobile home itself was a piece of the equation. The bank would then be forced to take a huge loss on the lot and sell it for 60% less than what it was worth when you took out the home loan. As an example, the property with the mobile home was worth $50k and you took out a loan for the full $50k. Without the mobile home the lot is worth $30k. The bank would take a $50k – $30k = $20k loss on it. Not good business for them. Worst thing for you is that your credit report gets jacked up and now you have a foreclosure on your credit report. You do not care because you still have your home and the new property of your dreams.
10. The mortgage companies will not even refinance a property that has a normal single family brick home and a mobile home on it. The mortgage company will ask you to move it off of the property before they do anything. With so much risk for the major mortgage lenders you can see why its not a good practice. Mobile home owners can still find companies that do mobile home and manufactured home loans. Most of these companies are local lenders such as your local bank or credit union. They know the area better than larger mortgage lenders and are willing to take a risk. Interest rates on a 30 year fixed rate mortgage for a mobile home are typically just a little bit higher than normal conventional home loans. There are plenty of mobile home loan companies out there that will want your business just be prepared for a few more restrictions to go along with your refinance than if you had a normal single family home.