How to avoid mortgage insurance when financing a manufactured home

If you own a manufactured home, or if you are looking to purchase
one, here is what you need to know when it comes to mortgage loan
financing:

Manufactured homes are not the same thing as modular homes.
Manufactured homes are constructed, purchased at a dealer, and then
moved to their final destination where they are permanently attached to
the earth. If you’re looking to purchase a manufactured home, many
lenders will deny you because it is a risky financing vehicle. This is
due to the fact that technically you could detach the dwelling and move
it to another property. Manufactured home loans are traditionally
more difficult to come by in terms of financing and often contain higher
rates and fees due to the associated risk that comes with this type of
property. Some lenders will you allow for you to secure financing for a
manufactured home without the need for mortgage insurance; meaning
avoiding an FHA mortgage. FHA mortgages
do contain a monthly mortgage insurance payment and can end up costing
you more, but could be an option for you if there are less than perfect
alternatives.

To get a Conventional mortgage without mortgage insurance, you need to have at least 20% equity and have a credit score
of 640 or more. It can be used for purchasing or refinancing without
pulling cash out. The property has to have the HUD plates representing
the property is a manufactured home. The property also must be a double
wide and has to be a Delta after the year 1978. If you are looking to
purchase a manufactured home for the first time, Conventional mortgages
will allow you to do that type of financing so long as you find a
property with the real estate included. In other words, the house is
already affixed to the earth and is being sold as real estate. Financing
to secure the land and attach the unit is an entirely different animal
that typically comes with higher rates and fees. These loans are more
difficult to come by. If you are looking to get a manufactured home, get
pre-qualified to purchase a house with the expectation that the
manufactured home is already attached to the real estate and is going to
be sold as one property. This will give you the best outcome for
success in this particular type of property arena.

Another outlet for this type of financing is FHA. FHA contains two
forms of mortgage insurance; an upfront mortgage insurance fee and a
monthly mortgage insurance payment that is otherwise avoided when you
go with a conventional mortgage. No matter what your financial situation
is, look at getting qualified for both types of financing. It is
helpful to know that if you can use conventional financing and avoid PMI
you will have an easier time handling the payment. The payment will be
lower which can increase your buying power while you remain under the
20% equity margins.