While many people have heard of certain types of equity loans that can help them make everyday purchases, not many are aware of mobile home equity loans. But for those who own a mobile home, they can be a major help that free up finances and make life much more comfortable.
Some people believe that cashing these loans out is complicated and takes a lot of time and has many steps. But the reality is that doing so isn’t all that hard and can be done painlessly, even by someone who hasn’t tried it before.
What is A Mobile Home Equity Loan?
What exactly is a mobile home equity loan and how does it work? Basically, a mobile home equity loan is a kind of financing that allows someone who owns a manufactured home to borrow an amount of money by evaluating and then leveraging the equity they have built in the property they own. 1
That explains that, but let’s go back even further. What is equity and how does that work? The most basic definition says that it is the difference between the current market value of a property and the outstanding amount of any loans or mortgages secured against it. In other words, it is a value that you can get for the property that you owe. 2
When you get the money from an equity, you can spend it on a number of things. Any everyday purchase can be made with the money from an equity loan, including a mobile home equity loan.
Now, in order to qualify for a mobile home equity loan, you usually need to meet certain standards, such as having a decent credit score, receiving a stable, regular income, and of course having a valuable equity for your property. This will all be determined by a team of lenders. These lenders might also require that the mobile home be attached in some way to a permanent foundation and classified as real property. 3 That isn’t always the case, but it sometimes might happen in order to get your equity.
The terms of any mobile home equity loan are going to be different depending on the lender that you use, but they typically include regular fixed interest rates as well as a repayment schedule that ranges from about 5 to 30 years on average. When it comes to repaying, you will be required to pay monthly, just like a to a traditional mortgage that you could get on a house. 4
Your mobile home is going to serve as collateral for your loan. This means that if you end up not paying back, or defaulting, on the loan, whoever lent you the money has the right to repossess your mobile home after you are warned and don’t make multiple payments.
How To Cash Out Your Mobile Home Equity Loan
So, let’s say that you want that equity, what do you need to do to get it? What is the process of taking the value of your mobile home and putting it into your hands?
After signing the loan agreement, your lender will then give you the loan funds. This can be done through direct deposit into your bank account or by issuing you a check.
Now, it’s important to remember that the time it takes to receive your funds can change case to case but usually it is within only a few days after the loan agreement is finished and agreed upon.
Once the money is in your hands, it is yours to do whatever you want with it. As mentioned before, you can use the loan funds for anything, such as home improvements, consolidating your debt, or other financial needs.
Making Monthly Payments ASAP
It is vital that you start making your monthly payments according to the loan terms that you agreed to. Make sure that you make these payments on time every single month in order to avoid penalties and protect your credit score.
Cashing out your mobile home equity loan means that you have to do some careful planning and consider your financial situation and how it can help…or possibly make your situation worse.
It is vital that you understand the terms of your loan agreement and take every step possible to pay it back on time every single month.
SOURCES:
1: https://www.usbank.com/home-loans/home-equity/home-equity-loan.html
2: https://www.investopedia.com/terms/e/equity.asp
4: https://www.lendingtree.com/home/home-equity/how-long-are-home-equity-loan-terms/