Manufactured-home buyers find few financing options
By Jennifer Hopkins
Cathy Bailey financed her "perfect home" with credit cards before she discovered Welcome Home Loans, refinanced, and saved $287 a month.
Imagine buying a home without having fair, affordable mortgage financing available.
This is exactly the barrier faced by most manufactured-home buyers.
Cathy Bailey owned a big lake house, but, once her kids were grown, didn't need all that space and wanted less to take care of. “I’m not quite at retirement age but I’m getting there. Smaller is better for me in the long run,” she says.
She located her perfect home in rural Weare, New Hampshire. The manufactured (sometimes called mobile) home offered a manageable size in a peaceful setting. The back porch overlooks a stream visited by wildlife, including turkeys and deer.
"Knowing that I'm now giving back to the community makes the whole experience more positive and worthwhile.”
Cathy applied for a mortgage to all types of financial institutions, and was turned down each time. One loan officer stopped the application when they learned the age of the home. Others said they wouldn’t finance mobile homes at all.
So Cathy bought the home of her dreams with four credit cards, each offering an introductory 0% interest rate for the first year. When eight months of that first year passed, and the cards' 14% interest rate was ready to kick in, she says she began to panic a little.
"All I wanted was a loan,” she said.
A casual conversation at a local supply store led Cathy to call the New Hampshire Community Loan Fund. She was relieved to learn that the nonprofit offered Welcome Home Loan mortgage loans for manufactured homes.
Cathy was approved for a fair, fixed-rate mortgage loan for 30 years with no prepayment penalty in case she wanted to pay it off early. She was able to pay off the credit cards, and used a small amount of cash back to better insulate the home. This allowed her to save $287 a month.
There is growing national recognition, most recently from the Federal Housing Finance Agency, that manufactured homes are a significant source of housing and that homeowners would be better served by more-stable financing.
Unfortunately, very few lenders offer financing for manufactured homes because there is no secondary market for these loans (meaning the lenders can't bundle and sell the mortgages to free up cash). Also, loans on manufactured homes are typically smaller and less profitable than those for conventional built-on-site homes.
As a result, people wishing to buy manufactured homes face major barriers. Like Cathy Bailey, these homeowners can face predatory loans with high down payments, high interest rates, short repayment terms, adjustable rates, and harsh prepayment penalties.
“It was stressful and frustrating that no other lender would provide a loan,” Cathy told us.
In the end, Cathy says she liked borrowing from the Community Loan Fund, partly because “paying back my loan allows the Community Loan Fund do more loans to help other people. Knowing that I'm now giving back to the community makes the whole experience more positive and worthwhile.”
Jennifer Hopkins is the Single-Family Housing Program Manager at the Community Loan Fund.
NMLS #395262. Licensed by the New Hampshire Banking Department.
New Hampshire Community Loan Fund, Inc. NMLS #253893