How to Refinance a Mobile Home

Are you looking to refinance your mobile home but don’t know where to start? That’s where this guide comes in handy. CIS Home Loans knows that refinancing can be the best move you can make for your financial situation. Not only could it allow you to reduce your monthly payments, but it can also provide you with a better interest rate compared to what you’ve got right now. We’ll be discussing how to refinance your mobile home along with the eligibility requirements that apply.

We will also discuss the types of loans currently available. Here’s a look now at everything you need to know.

Why Would You Refinance Your Mobile Home?

Refinancing your mobile home comes with plenty of benefits. They include but are not limited to the following:

  • Lower interest rates
  • Loan terms different than the initial or previous loans
  • The ability to switch from adjustable-rate mortgage (ARM) to a fixed-rate mortgage 1
  • Access to cash after building up equity

 

It is important to note that before refinancing, you’ll need to understand some of the requirements that may affect whether or not you qualify. Let’s take a look at what those are right now.

What Are The Requirements For Refinancing Eligibility?

Prior to determining if refinancing your mobile home is possible, you’ll need to pay attention to the following requirements. They include but are not limited to the following:

  • Home classification: The mobile home must be affixed to a foundation and be titled as real estate. In other words, it should be considered real property in order to get the best chance of refinancing it. However, your options could be limited if it has a personal property classification.

 

  • Home age and conditions: Any mobile home built after 1976 since the safety standards outlined by the U.S. Department of Housing and Urban Development (HUD) has a better likelihood to qualify. To see if your home was built on or after June 15, 1976 or later, you will need to take a look at the red certificate that is affixed on your home for further instruction on when it was built. 2 Plus, the home must not have any structural issues that are significant.

 

  • Credit score and financial standing: Standard to the loan process, your credit score and your financial history will also play a major role in the refinancing process. Your credit score, income, debt-to-income ratio, and employment history will be reviewed by lenders. This will determine whether or not you have the ability to repay your new loan.

 

  • Equity in your home: If the plan is to refinance your mobile home for cash access, having sufficient amounts of equity is required. In other words, the current market value of the mobile home needs to be greater than your current loan’s remaining balance.3 For example, if the mobile home is appraised at $70000 and you have a remaining loan balance of $20000, then your equity will be $50000.

 

These requirements must be followed accordingly to determine your best chance of refinancing your mobile home. Those who have one constructed prior to 1976 may have difficulty securing refinancing options.

What Are The Types of Loans Available for Refinancing?

Knowing what types of loans are available for refinancing your mobile home is key. Each has their own advantages and disadvantages. Here’s a look now at each one:

  • Conventional loans: Private lenders offer conventional loans that offer interest rates that are competitive when compared to different lenders. However, these will be available to those who have strong credit. Another potential disadvantage for some prospective lenders are that these loans in particular are not government insured.4

 

  • FHA loans: These loans are issued by the Federal Housing Administration (FHA). These are known as FHA Title I loans, which have been issued since 1969.5 The biggest advantage of this loan is that it can refinance both the mobile home and the land that it is on. FHA II loans will cover real property mobile homes. For those who might not have the best credit, these loans in particular could be a good fit.

 

  • VA Loans: This type of loan will be for active duty servicemembers and veterans. One of the major benefits is that these loans will be guaranteed by the Department of Veteran Affairs (VA) stating that 40 percent of the loans amount or a maximum of $20000 is covered in the event of a default.6

 

Please review any financial information you have such as your credit score as well as any loan terms based on the lenders you desire to work with. This will give you a better idea of what loan will be the best option for you going forward.

What Steps Should You Follow To Refinance Your Mobile Home?

Finally, let’s take a look at the necessary steps that you need to take on how to refinance your mobile home. Follow these steps carefully to ensure you don’t overlook anything. Here’s what you need to do:

  1. Evaluating your current loan: Get the paperwork for your existing loan terms. You will need to review the interest rate, remaining balance, and any prepayment penalties you may have accrued up to this point. Evaluation will be critical as it will help you decide if refinancing is a good idea or not.
  2. Determine what your goals are: Are you looking for a fixed-rate loan? Lower mortgage payments? Or cash access? You need to be clear in what your goals are so you can choose the best refinancing option for yourself.
  3. Check your credit score: You need to get a copy of your credit report. Check for errors before going any further since this will be useful in getting the best interest rates and terms. Get a free credit report annually here!
  4. Get the necessary documents: You will need such documents like proof of income, tax returns, and other relevant information tied to your current loan. These will be useful for those who want to streamline the entire process.
  5. Consider your best lender options: Take your time with this step here. You’ll want to look at your best lender options so you can be able to choose one that best fits your needs and preferences for fees, closing costs, and terms.
  6. Apply: Complete the application process as directed.
  7. Close: Assuming you have been approved, sign the paperwork, pay the closing costs, and you’re good to go.

 

Final Thoughts

Refinancing your mobile home could be possible if you fit the right requirements. Yet, using this guide will make the process easier for you whether it’s the decision aspect of refinancing or finding the right loan for your mobile home. CIS Home Loans will help you secure the best loan possible for your refinancing needs. Contact us today for more information.

Some products may not be available in all states. Information is subject to change without prior notice at the sole discretion of CIS Financial Services, Inc. All loan programs subject to borrowers meeting appropriate underwriting conditions. This is not a commitment to lend. Other restrictions may apply.

Sources:

  1. https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-fixed-rate-and-adjustable-rate-mortgage-arm-loan-en-100/
  2. https://archives.hud.gov/offices/hsg/sfh/ref/sfhp1-9c.cfm#:~:text=A%20manufactured%20home%20must%20be,No%20exceptions%20are%20allowed
  3. https://www.ml.com/articles/how-to-calculate-your-home-equity-and-why-it-matters.html#:~:text=You%20can%20figure%20out%20how,home%20equity%20lines%20of%20credit
  4. https://www.consumerfinance.gov/ask-cfpb/what-is-a-conventional-loan-en-117/#:~:text=A%20conventional%20loan%20is%20any,be%20conforming%20or%20non%2Dconforming
  5. https://www.hud.gov/program_offices/housing/sfh/title/manuf14
  6. https://www.va.org/va-loans-for-manufactured-homes
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