The Challenges of Financing a Mobile Home
Mobile home financing comes with its own unique challenges.
If your mortgage business includes deals in smaller towns and rural properties, you’ll need to be familiar with the nuances that come with financing a mobile home. It’s not difficult, but it is different.
Here are a few questions to ask and things to be aware of:
- Is the mobile home in a mobile home park, or on land owned by the borrower? We have access to lenders who will consider mobile homes on rented pads as well as on owned land.
- Have there been additions to the mobile home?This is a big one. If there have been additions that include any alteration/addition to the electrical system, lenders will want to know these have been done with a permit. Ask your borrower up front if they have permit documentation. If it was done without a permit, you may expect lenders to require a permit and approval before advancing funds. In British Columbia, the property cannot be listed for sale until the additional electrical work has been inspected and approved. However, if the mobile home’s electrical system is untouched from the factory and the CSA sticker is still attached, there shouldn’t be a problem.
- What is the age of the mobile home? Mobile homes depreciate in value more quickly than regular construction. So lenders will likely limit the age of the mobile home that they will be prepared to take as security. This will often be 15 years old or newer.
- Amortization periods will likely be shorter. This is again, due to the fact that mobile homes depreciate in value faster than their stick frame counterparts. Lenders will offer shorter amortizations periods and this in turn will lead to higher monthly payments.
- Financing a mobile home when it’s new from the factory, can be tricky. Many manufacturers want to be paid in full before the home leaves the factory. On the other hand, lenders don’t want to fund a loan until the mobile home is on the land.
Over the years, Kokanee Mortgage has helped borrowers achieve mobile home financing through our unique systems and experience.
If you’re working with a borrower in need of financing a mobile home, the underwriting team at Kokanee Mortgage is ready to help find simplified solutions to these unique challenges.
