Chattel or (Home Only) Loans
A Chattel Loan commonly referred to as a “home only” loan is just that, a loan on the manufactured home only that does not include any land purchase. This is more of an installment loan than a mortgage. Chattel Loans are personal property loans made for the purchase or refinance of a manufactured home that is not permanently affixed to the real estate. Chattel loans are usually used for home in manufactured home communities. Down payment requirements can be as low as 5%. This type financing is typical in a land lease situation or for someone that may be placing the home on a relative’s land that they do not have title to. A Chattel loan has a few other advantages. There are minimal closing costs involved because it is not a typical Land/Home mortgage. So usually no appraisal, title policy, surveys, doc stamps and many other costs.
Construction Loans
Construction loans are combined with either an FHA or conventional loan (permanent loan). The construction loan terms are in place during the construction period (usually 4-6 months), and then changed to the terms of the FHA or conventional loan once the construction is done, construction lenders will either do a one or a two time close. A onetime close, as the term suggests, requires only one closing, and when the construction is completed, the terms are modified to the permanent loan. A two time close requires closings on both the construction loan and the permanent loan, which can result in higher closing costs due to multiple closings. The proceeds of the construction loan are paid out in draws to the contractor/builder (progress draws) as the project progresses. Lenders will usually require the borrower to pay interest only payment on whatever draws the contractor/builder has taken.
If you own your lot already, you can use the equity in the property for down payment. The permanent loan can be either an FHA or conventional loan. All of our construction loans are one time close loans. We offer construction financing for Manufactured, Modular, or site built homes. The interest rate on your permanent loan is locked at the time you close your construction loan, so you do not have to worry about interest rates increasing while your home is being built.
Conventional Loans
The Federal National Mortgage Association (FNMA or Fannie Mae)was established in 1938 as a publicly traded government sponsored enterprise(GSE). The purpose of the GSE’s is to purchase loans from lenders and pool the loans into mortgage backed securities (MBS). This allows the lenders to sell their loans and free up capital to make more mortgage loans. Lenders underwrite their conventional loans to Fannie Mae’s guidelines, and will either sell them to an investor that will service the loan for Fannie or service the loan themselves. Conventional loans have down payment requirements as little as 5%. They have programs for all property types including Manufactured Homes and Modular Homes. Conventional loans are sometimes the most attractive option for individuals who have larger down payments because unlike FHA, conventional loans do not require monthly mortgage insurance if you put more than 20% down.
FHA Loans
FHA loans have been helping people become homeowners since 1934. The Federal Housing Administration (FHA), which is part of HUD, insures the your loan so the lender can offer more favorable loan terms. FHA usually have lower down payment requirements, and easier credit requirements than conventional loans. They allow the seller to contribute most, or all of the buyers closing costs. FHA loans are usually the best fit for first time home buyers for these reasons. Additionally, part, or all of the down payment can be gifted from a relative. FHA allows several types of properties and offers programs for Manufactured and Modular homes.
FHA does limit the loan size by County. To find out the maximum loan size in your area, go to:https://entp.hud.gov/idapp/html/hicostlook.cfm. HUD also maintains a great library of FHA reference materials. For more information go to: http://portal.hud.gov/hudportal/HUD?src=/library/.
VA Loans
A VA loan is a mortgage loan in the United States guaranteed by the U.S. Department of Veterans Affairs (VA). The loan may be issued by qualified lenders. The VA loan was designed to offer long-term financing to eligible American veterans or their surviving spouses (provided they do not remarry). The basic intention of the VA direct home loan program is to supply home financing to eligible veterans in areas where private financing is not generally available and to help veterans purchase properties with no down payment. Eligible areas are designated by the VA as housing credit shortage areas and are generally rural areas and small cities and towns not near metropolitan or commuting areas of large cities.
The VA loan allows veterans 103.15 percent financing without private mortgage insurance or a 20 per cent second mortgage and up to $6,000 for energy efficient improvements. A VA funding fee of 0 to 3.15% of the loan amount is paid to the VA; this fee may also be financed. In a purchase, veterans may borrow up to 103.15% of the sales price or reasonable value of the home, whichever is less. Since there is no monthly PMI, more of the mortgage payment goes directly towards qualifying for the loan amount, allowing for larger loans with the same payment. In a refinance, where a new VA loan is created, veterans may borrow up to 90% of reasonable value, where allowed by state laws. In a refinance where the loan is a VA loan refinancing to VA loan (IRRRL Refinance), the veteran may borrow up to 100.5% of the total loan amount. The additional .5% is the funding fee for an VA Interest Rate Reduction Refinance.
USDA Loans
The US Department of Agriculture (USDA) offers a Rural Development loan that is similar to an FHA loan. The loan is guaranteed by USDA, so the lenders can offer more favorable terms. USDA loans do not have a down payment requirement, and will loan up to 102% of the home’s value. USDA’s Rural Development’s mission is to improve the quality of life in rural communities by providing loans for housing and community facilities. As such, to qualify for a USDA loan the home must be located within the boundary area of a rural community as defined by USDA.
To find out if your property is located within a rural community boundary area, go to:
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp&NavKey=property@11.
The two main attractions to the USDA Rural Development loan are the fact that it is a zero down payment loan, and the mortgage insurance requirements are lower than the FHA loan. USDA does have limitations on the amount of household income you can have.
“BUY FOR” Loan
A “Buy For” is a loan for a manufactured home in which the primary buyer will not reside in. These type of loans usually require a higher down payment (usually starting around 20%) and often shorter terms.
Secondary Homes
This Type of Loan is used when the buyer will not be using the manufactured home as their primary residence. These type of loans usually require a higher down payment (usually starting around 20%) and often shorter terms.
Investment Property Loans
An Investment loan is used when the buyer is purchasing a manufactured home to create income from reselling the home or by renting the manufactured home out. This type of loan also requires more down payment and is for shorter terms.