Before You Buy a Manufactured Home...

Manufactured homes, formerly called mobile homes, are built on a non-removable steel chassis and transported to the building site on their own wheels. Some manufactured homes look like the houses you see in a traditional neighborhood--they don't all resemble a traditional single or doublewide "trailer." There are important considerations you should make before you decide to buy a manufactured home.

Some communities and developments do not allow manufactured housing. Research local zoning ordinances, deed restrictions, restrictive covenants, and other similar documents before you buy land for a manufactured home.

We're Looking for Growing Equity

One reason most of us want to own a home instead of rent one is for its investment potential. And since we often don't live in the same house for enough years to pay down the balance very far, we depend on the rising cost of real estate to increase our equity, the portion of the home's value that we get back to buy another home when we sell.

You Might not Get it with a Manufactured Home

In general, manufactured homes decrease in value. That's not true for every type of manufactured home or in every instance, but it is true overall. Even your land could decrease in value if it is surrounded by other manufactured homes that are decreasing in value. Do your homework! Learn as much as you can about the resale value of manufactured homes in the area before you buy. A real estate agent can help you find that information.

Resale of the Home

Resale is the one major factor most buyers fail to take into serious consideration. 7-15 years from now, what then?

OK, so you decide to make the commitment to buy a manufactured home, despite the fact it most likely will depreciate over the years, and for a variety of reasons.

But what happens when you later decide to move?

Have you tried to get a loan on a 10 year manufactured home lately? How about one that is 15 years old? Have you noticed all the major financial institutions limit their funding for only newer models and they do so, with considerable conditions. All to limit their risk!

Why not pick up a phone right now and start calling around for a loan. Tell the loan officer you're wanting to fund a purchase for a 10-15 year old manufactured home, see what they tell you.

If you have trouble today getting financing for a manufactured home that old, can you imagine how tough its going to be 15 years down the road when you either want to, or need to move on and can't sell for the lack of financing for the new buyer?

Ah, the new buyer! Generally speaking, to sell many of the homes which are 15 years of age or more, the seller has to carry the financing themselves. In other words, you have to assume the risk of the loan, something the megabanks aren't even willing to do. So the questions is, why should you take the risk that the banks fear to take?

So you can see the delima. Let's say, 15 years from now, you're wanting to move, but can't sell for the lack of financing. You may decide you can't finance the loan yourself because you need the proceeds from the sale immediately so you can purchase something else. Now what do you do?

This is why you have to consider RESALE RIGHT NOW, before you make the purchase on the home! Because the consequences you're faced with 15 years later is that you may have a home with little or no value (that you have been making payments on all these years) and now you have little to show for it.

When compared to a stick built home which is earning double-digit equity each year, perhaps doubling in value in a 8-10 year period, is the Manufactured Home a good option?

Only you can decide that, knowing the potential risks!

Land-Home Packages

We see many people who opt into land-home packages, installment financing options that are set up by the retailers who sell manufactured homes. The packages include the house, the land, and all work needed to get the home ready for occupancy.

But Hold on Before You Sign

Land-home packages are fairly easy to get approved for, even if you have credit blemishes, but the interest rates can be high. Many people are making higher payments for a manufactured home than they would have made for a traditional or modular home--and those structures are nearly always a better investment. Explore your choices before you assume that you cannot buy a traditional home. You might be surprised at the financing options that are available.

Is it on a Permanent Foundation?

Some lenders will not finance a manufactured home if it is not on a permanent foundation. The dealer will get if financed for you either way, but if you are putting the home on land you own, make sure it's on a permanent foundation. Why should you care? Because if it isn't, and you decide to sell, it will turn off some buyers and limit the number of lenders they can choose from. That means the home will be on the market longer.

Other Considerations

There are other questions you should ask before you buy a manufactured home. Is it built to handle the climate at its destination? What type of warranty does the manufacturer provide? Does the dealer help resolve warranty problems? How long has the manufacturer been building homes? What can they tell you about the home's structural components? Ask as many questions as possible to help you feel comfortable with the purchase and the manufacturer before you say yes to the sale.

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