Mobile Home Refinancing: What You Need To Know

Mobile home refinancing isn’t always top of mind for manufactured homeowners, but it’s a topic that deserves more attention. After all, oftentimes you can enjoy considerable savings on your mortgage loan by applying for a mobile home refinance.

For clarity’s sake, a manufactured home is one that’s built piece by piece in a factory and affixed to a permanent chassis with wheels – of which mobile homes are one kind. These properties are crafted and assembled according to building codes mandated by the U.S. Department of Housing and Urban Development (HUD).

Increasingly growing in sophistication and price, it’s not uncommon to take a home loan mortgage out upon one of these preassembled properties. Noting this, a mobile home refinance is also possible – meaning it’s a good idea to be aware of your options, considering how much that you potentially stand to save in interest rates and fees.

Can You Refinance A Mobile Home?

Purchasing a mobile home (aka manufactured home) is often one of the most cost-affordable ways to engage in homeownership today.

A chattel mortgage (a loan for a movable piece of property, like a manufactured home, which serves as “chattel” and collateral for the loan) offers a helpful way for many buyers to purchase these properties. In effect, if you struggle financially and wind up defaulting on a chattel mortgage, a lender can take possession of the property and sell it to pay off the loan.

Bearing this in mind, it’s not uncommon for manufactured home owners to seek a mobile home refinance as a way to secure a lower interest rate, smaller monthly payments, or an extended loan repayment term. In fact, a chattel mortgage can even be refinanced into a traditional mortgage loan with a little extra footwork.

True: You do have the option to refinance your real estate using a personal property loan as well. But doing so often comes at a higher interest rate and higher monthly fees – hence the reason so many mobile homeowners look to refinance into a standard mortgage loan instead.

A Note On Refinancing Manufactured Home Loans

Several decades back, mobile homes became considered a type of manufactured home in real estate terminology. Thinking about how to refinance manufactured homes requires you to observe certain customs as opposed to refinancing other types of property, such as a modular home or traditional single-family dwelling. You can absolutely refinance a mobile home, however. Simply read on to find out more about mobile home refinancing.

Mobile Home To Mortgage Loan Refinance Requirements

According to HUD, several minimum requirements must be met in order for a mobile home refinance to be able to take place. You might have a good sense of whether you’re eligible already if your manufactured home boasts indicators such as a HUD certification label, data plate, seal or similar.

Structural Requirements

According to requirements handed down by the Department of Housing and Urban Development, the rig must be:

• Built on a permanent foundation that meets HUD standards
• Crafted after June 15, 1976
• A minimum of 400 to 600 square feet in size
• Boast the absence of axles, wheels or a towing hitch
• Taxed as real property

Land Ownership

The concept of real property describes not only the home and land that you’ve purchased in a real estate transaction, but also who has an interest in your property and can benefit from it. If you own the land on which your mobile home resides, then you’ll be eligible to get the best manufactured home rates. If your mobile home instead sits on leased land that you do not own, you’ll need to look to a personal property loan to refinance. Note that as part of a manufactured home refinancing, you can refinance your mobile home and roll the cost of converting the home and land into real property into the mortgage loan that you obtain.

Real Estate Title

Speaking with a real estate attorney or title company (who is responsible for the recording of legal documents that identify where the title to a property resides) can also help you determine how your property is titled – for example, as real property or chattel. However, if you elect to purchase the land on which your mobile home resides, be advised that you may have the opportunity to get your manufactured home retitled from personal property to a real estate property instead. Fees can range from the hundreds of dollars on up. In any event, you’ll also want to grab a copy of the deed to the land where your home is situated.

How To Refinance A Mobile Home Loan

Have you determined that you’ve met the above criteria? Congratulations – you’re eligible to pursue a mobile home refinance. Below, you’ll find the information needed to set about refinancing your manufactured home.

Research The Cost To Refinance

You’ll have two choices when it comes to thinking about refinancing that will influence the cost to refinance: Whether to use a limited cash-out refinance or a cash-out refinance. Likewise, you’ll also want to speak with your lender to get a sense of any attached expenses. Note that you’ll need to be prepared to pay more in property tax each year as part of your mobile home refinance as well. 

Choose A Loan Type

Many types of mortgages are available to current and aspiring homeowners. If you’re thinking about a mobile home refinance, it pays to acquaint yourself with various types. 

• Conventional refinance: A conventional home loan refinance can help you remove mortgage insurance payments, minimize monthly bills, and shorten or lengthen the term of your loan. Engaging in a mobile home refinance essentially gives you the tools to pay off your current mortgage with the proceeds from a new loan and adjust the terms and fees under which money is lent to you. 

• FHA streamline refinance: A Federal Housing Administration (FHA) streamline refinance loan is a mortgage finance product that’s designed to help homeowners speedily lower their interest rate and reduce their monthly payment. Select borrowers may even find that they’re able to skip having to conduct an appraisal prior to closing.
• VA streamline refinance: A Department of Veterans Affairs (VA) streamline refinance is backed by the federal government and designed to help veterans and servicemembers access mortgage options without having to make a down payment or acquire private mortgage insurance. Refinancing your mobile home through this program can help you obtain lower interest rates and smaller monthly payments.
• USDA streamline refinance: The United States Department of Agriculture (USDA) offers rural homeowners the ability to obtain a loan without having to put down a down payment, and at lowered guaranteed fees. A USDA streamline refinance can help you capitalize on more favorable market conditions to adjust your term length or lower your interest rate, even if you don’t have much equity in your home. At the time of publishing, Rocket Mortgage® is not accepting USDA loan applications.

Talk To A Mortgage Lender

As no two financial institutions – be they banks, fintechs, credit unions or online lenders – will offer you money to borrow under the same terms and conditions, it’s important to know how to choose a mortgage lender. You’ll want to ask questions like: What will my fees and monthly payments look like? What types of mortgage refinance options are available? What requirements and qualifications are needed, and what minimum credit scores are required? How large of an interest rate and APR are we potentially looking at? A mortgage lender can help answer any questions you have concerning loan options, fees, terms and other common topics. 

Compare Interest Rates

Part of the shopping and comparison process should involve you staying up to date on current mortgage rates. You should also pull a free credit report from leading credit bureaus and have a good sense of your credit history. Be advised, however: General market mortgage rates may vary from the ultimate rate that you are offered, which is impacted by a variety of factors based on the individual lender and your financial history and situation. 

Apply To Refinance

You will also need to supply a number of documents verifying your income, debt, and credit history to lenders as part of the refinancing process as well. Make sure you have tax statements, W2 forms, details on any investments or property holdings, and other details readily available. You may also be asked to supply your ID, Social Security number and other personal information. 

Prepare For Closing

Closing takes place at a predefined time and place at which all outstanding items necessary to finalize your loan refinancing will occur. You’ll also need to pay any costs associated with closing on your new mortgage (those associated with loan origination fees, appraisals, etc.) It’s important to have all paperwork and finances in place necessary to finish the closing process to ensure a smooth transaction.

The Bottom Line: A Mobile Home Refinance Could Save You Money

A mobile home refinance is certainly possible, and in fact, thousands of individuals and families apply to refinance their manufactured home every year. Doing so can provide you with considerable cost savings, a better interest rate, and an opportunity to extend the life of your home mortgage loan. It can also bring about an opportunity to purchase the land on which your mobile home resides.

Of course, prior to applying for any home refinancing, it’s important to do your research and shop around. Comparing offers and lenders is a key step of this process. If you’re feeling overwhelmed by your existing loan or looking to reduce the cost of your current mortgage though, a mobile home refinance may be right for you. You can take the first step on the journey toward qualifying for a refinance by checking your credit report and score on Rocket Money.