Here, we draw on our
29 years of experience to attempt to answer some of the most asked
questions.
- Loans for mobile
homes are “consumer loans” not “real estate”
loans and are treated as such by the state. There are no special
programs for borrowers such as “First Time Home Owners”
or “Veterans.”
- Loan Approvals
are issued in a different manner than conventional real estate.
In conventional real estate a borrower is approved for a specified
dollar amount and then looks for a home within those parameters.
With mobile homes the borrower must first find a home and then
the approval is issued for that specific home only.
- In June 1976 HUD
(Housing and Urban Development) instituted regulations for the
manufacture of mobile homes. Thus, homes built June, 1976 or before
are called “Pre-HUD” homes and those built after are
“HUD.”
- Generally, homes
built 1970 or after can be financed in California whether
in a park or on land, on or off a foundation. Single wide homes
over 15 years old cannot be financed.
- Down payments.
There are no “0” down programs. Down payments are
dependent on age of home and FICO score. Pre-HUD homes normally
require a 20% down payment. FICO guidelines for HUD homes: 700+
= 5%, 660 to 700 = 10%, 630 to 660 = 20%, 600 to 630 = 30% or
40%, below 600 = 40%, 50% or more. These are guidelines only and
can vary depending on circumstances.
- Interest rates.
In general, rates are higher than conventional real estate rates.
The age of a home will often determine the rate and Pre-HUD homes
carry higher rates than HUD homes. Of course, other factors, such
as FICO scores and DTI will affect rates. At the present time,
rates can be as low as 8.5% and as high as14-15%.
- FICO (Fair Isaac)
credit scores. We use Experian credit reporting agency and their
scores can be between 450 and 850. In general, a score below 600
will disqualify a borrower, however occasionally a lower score
can be approved with a large down payment and other extenuating
factors. Click here for an informational PDF document explaining
FICO.
- Stated Income
is designed to allow those who have income that is difficult to
verify such as self-employed to qualify for a loan. Applicants
are not required to prove their income but it requires a 700 plus
FICO score and a minimum 40%-50% down.
- DTI (Debt to Income
ratio). Sometimes called “Back End Ratio”, this
refers to the percentage of borrowers gross monthly income required
to service all contractual obligations. Normally, the maximum
allowed is 45% but sometimes that can be increased with a large
down and/or a high FICO. When determining the DTI always include
the estimated payment for tCreated on 9/23/2005 4:01 PMhe new
home plus the space rent. Example: Gross monthly income = $3000.
New home payment $700, space rent $500, auto payment $450, credit
cards minimum payment $300. Total contractual payments = $1950.
DTI ($1950 divided by $3000) = 65%. In this case, the maximum
allowed is 45% so this borrower would not qualify.
- Combining incomes
to meet the 45% DTI requirement. Although any person can be added
to the loan as a Co-Applicant, in most cases only husband and
wife can combine their incomes to satisfy the DTI. In certain
rare instances two relatives who have established credit together
over several years can combine incomes. All others must stand
alone.
- HR (Housing Ratio).
Sometimes called “Front End Ratio”, this is determined
by the lender and usually ranges from 30% to 35%. It is calculated
by adding the new home payment to the space rent and dividing
the total by gross monthly income.
- Term. In general
loans are for 15 or 20 years depending on factors such as down
payment, FICO score and age of home. Occasionally, higher loan
balances will qualify for a 25 year term.
- Applications.
We require no paperwork prior to obtaining an approval. The 10
minute application can be taken over the phone, faxed in or filled
out online. Usually we can give you an answer in 2 to 3 working
days. Applications must contain the complete home information.
- Processing
It usually takes 3 to 4 weeks after borrowers acceptance of the
approval to gather the required documentation, process through
escrow and then be funded by the lender. If it takes longer, or
if the approval expires (45-90 days), it is almost always caused
by the failure of the borrower to provide the required documentation
in a timely manner.
- Comparable Sales
All sales of mobile homes in California are required to be reported
to the State. The State compiles lists of these sales by Park
showing first sold price, last sold price, date of sale and age
and size of home. These lists are called “comps” and
appraisers use this information in determining the value of a
mobile home. In states where comps are not available the appraiser
must rely on the “book” value of the home. The “book”
is compiled by the N.A.D.A. (National Automobile Dealers Association)
and is similar to the “Blue Book” for autos.
- LTV (Loan to Value).
Most loans require an appraisal and usually the bank will stipulate
the LTV after reviewing the appraisal. The amount of loan approved
by the bank is almost always subject to the lesser of the sales
price or the appraisal including the comps report. 90% of appraised
value is common.
- Decal Number
is equivalent to a license plate on a car and it is important
because both the bank and the escrow company use it to search
title. It can often be found on a plate attached to the front
or back of the mobile home and on the Title and Registration of
the home. The decal number consists of three letters and four
numbers and usually starts with an “A” or “L.”
Example: ARW2798 or LGB7035. In some rare cases the decal will
start with “JP.”
- Refinancing.
Both Rate/Term and Cash Back (debt consolidation) require at least
a 640+ FICO score. Two refinance programs are available depending
on FICO score. The first will finance no more than 80% of the
original purchase price. (Not the current appraised price)
while the second will finance up to 65% of current appraised value.
Also, in most cases, the bank won’t return cash to the borrower;
they will pay third party debt only.
Rev. 7-23-09
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