If you are in the market to buy a home but have limited resources, one type of home that may fit your budget is a manufactured home. Manufactured homes can be placed in just about any location as long as there is a proper foundation and other structural considerations. If you are looking to purchase an already existing manufactured home, make sure that you do your homework before you give any money for a deposit on a sales agreement.
What Is A Manufactured Home?
A manufactured home is a home that is built in a manufacturing plant and transported via truck to where it is going to be installed. These homes typically have wheels on the chassis so they can be moved by a semi truck. Once the home arrives on site, in most cases the wheels and tongue are cut off the chassis and the home is permanently attached or affixed to the ground and foundation. These homes used to be called mobile homes, but in recent years that terminology has changed to manufactured home.
What is the difference between a manufactured home and a modular home?
Quite simply, manufactured homes are built with a transportation chassis and are built to conform to HUD Construction Codes. HUD Construction Codes and HUD’s Manufactured Housing Program is committed to the health and safety of manufactured home owners. This program regulates and oversees enforcement of building codes for manufactured homes throughout the U.S.
HUD maintains a complete homeowner dispute resolution department to assist homeowners and manufacturers resolve disputes when it comes to construction code violations, manufacturing defects etc. This is a very unique program to the housing industry. For more on this program visit: HUD.Gov.
Modular homes do not come with a transportation chassis and do not fall under any HUD program. Rather, modular homes are constructed and built according to local and state construction codes and guidelines. You will often see modular homes being transported on the highway. We have all seen them as they are typically a half of home sitting on a flatbed tractor trailer with a big sign on the back that says “Wide Load.” Manufactured homes might have the sign too, but they are sitting on their own wheels which are much smaller than tractor trailer wheels and often placed near the middle of the home.
How Can I Finance A Manufactured Home?
Typically one of the best places to get financing for a manufactured home is with the dealer you are buying the home from. Their financing sources are set up to handle your financing needs without much hassle. However, these sources might be a little more expensive in terms of interest rates and fees. You may want to look around to some mortgage companies to find one who can do FHA mortgages.
The Federal Housing Administration, the Veterans Administration, and the Rural Housing Services are all setup to provide mortgage financing for manufactured homes. You will have to have the home placed on a permanent foundation and have the title retired to convert your home into a permanent long term piece of real estate. In the long run this will help you be able to sell your home in the future if you need to.
What Is The Most Important Thing To Know About Buying a Manufactured Home?
There are actually two very important items to know about buying a manufactured home. Both of these only apply if you are planning on getting a US Government Guaranteed Home Loan through FHA, VA or the USDA Rural Housing Program.
Manufactured Home Must Be On A Permanent Foundation And Pass Inspection
If you are planning on using these sources for funding then you will need to get an engineering certification for the foundation of the manufactured home. Typically your mortgage company will help to arrange this inspection, but you need to know about it and be aware of it. This is especially true if you are planning on putting some money down on the home with your sales contract. Make sure that you have a contingency in place on the sales contract that allows you to get out of the contract and get your deposit money back if the foundation inspection fails.
The foundation inspection is accordance to HUD’s commitment to the health and safety of manufactured home homeowners. The Program is such that all foundations must meet the guidelines as specified in the HUD manual for Permanent Foundations Guide For Manufactured Housing, Sept 1996.
Home Must Be Built After June 15, 1976
Manufactured homes built before June 15, 1976 were not built to HUD’s safety code specifications and therefore are not financeable with a US Government Sponsored Loan through FHA, VA or USDA. Chances are, if the home has not had major structural changes made to it, and placed on top of a permanent foundation and certified by some type of engineering firm and located in an area where homes are similar and previously financed, you will not get financing from other conventional mortgage lenders. Best advice here: if you can’t buy it cash and it is older than 1976 do not buy it.
This should be enough information about manufactured homes to get you on your way to buying one. Again, they can be a great housing solution if you have a smaller budget. Make sure you do your homework before you put down any money for a deposit on a sales contract. If you do put money down, make sure that you have a contingency clause to let you out of the contract and can get your money back if there is anything wrong with getting financing.
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