Posted by John Doe
There are many reasons homeowners may choose a mobile home over a fixed home, often related to lifestyle choices or income. A mobile home is defined as a detached dwelling, without a permanent foundation, built on a chassis. Mobile homes are also connected to utilities. Despite the name, a mobile home doesn’t necessarily have to be mobile.
Many mobile home owners live in mobile home parks. Renting a space in a mobile home park is like any other residential lease, except in this case, the home itself belongs to the tenant. Mobile home parks are usually equipped with facilities and recreational areas for residents to use, the use of which is included in the lease. Some mobile home owners live in their homes year round, as their primary residence, while others use them purely as vacation homes.
Much of the population who own mobile homes can be described as “financially vulnerable,” for instance, low-income residents, or retirees. These residents may require a loan in order to purchase a mobile home, however, unlike a fixed home, you can only obtain a mortgage on a mobile home that sits on property that is owned by the same owner as the mobile home.
If you own a mobile home and keep it on rented land, the mobile home is considered the personal property of its owner, rather than real estate. You would be unable to get a mortgage on personal property, as a mortgage is only used for real estate. If you own the land on which the mobile home sits, however, you may be able to have it classified as real estate.
If you are hoping to get a mortgage on a mobile home, it’s important to discuss your needs with a mortgage professional to see if you are eligible for a mortgage. If your mobile home does count as real estate, then you should be able to get a traditional mortgage. In this case, your mobile home must be fixed on the land you own. So, if you have a mobile home that will move around, you will not be able to have it classified as real estate.
If your home is fixed on land that you own or are planning to buy, you should definitely speak to a mortgage professional about applying for a mortgage, rather than taking out a loan. There are several different types of mortgages available, depending on your situation, that will give you lower interest rates than a loan.
The most common type of mortgage is a fixed rate mortgage, which will keep your interest payments at a fixed rate during the entire term of your mortgage. Many homeowners favour a fixed rate mortgage because it allows for easier monthly budgeting, and protects you should interest rates suddenly rise.
Some homeowners, however, choose a variable rate mortgage. While your monthly payment remains the same, the interest rates on a variable rate mortgage fluctuate based on the market. This can be advantageous, as you can take advantage of lower interest rates to pay off more of your principal. Of course, it can go the other way as well, and interest rates may rise. Another reason homeowners choose variable rate mortgages is that they offer more flexibility and less harsh penalties should you want to pay off your mortgage before the term is up.
There are many other types of mortgages available, such as a reverse mortgage, which is aimed specifically at retirees, and allows you to access your home equity in monthly installments or as a lump sum. Since a high percentage of those who purchase mobile homes are retirees, a reverse mortgage may be something to discuss with a mortgage professional, if you already own a property.
Another helpful mortgage for mobile homeowners to know about is a portable mortgage, which allows you to move your mortgage from one property to another without paying a penalty. This is definitely a good idea if you suspect your living circumstances may change in the near future, as fixed rate mortgage penalties can be high.
If your mobile home sits on rented property, and if it isn’t fixed, then you will need to apply for a loan, should you require financial help. However, if you do own the land and the home is fixed, you should definitely get a mortgage rather than a loan, because the interest rates are usually significantly lower. If you have both options, it’s important to note that you cannot take out both a loan and a mortgage on the same piece of property.
Mortgages and mobile homes can be confusing, and you want to make sure you get the right mortgage. The best thing to do is to speak to a mortgage professional, to determine whether you can get a mortgage, and what kind of mortgage would be best for you.