Manufactured home loans for prospective homebuyers with bad credit

If you’re suffering from poor credit and thinking about buying a manufactured home, then you can go for a bad credit manufactured home loan. Manufactured home loans for people with bad credit are now being offered by a number of mobile home lenders.

These loans are easy to get and can help you boost your credit score as well. Many prospective homebuyers’s who can’t buy traditional homes due to their credit problems frequently select manufactured homes. A bad credit mobile home loan has some similarities with a conventional mortgage loan.

How can you get bad credit manufactured home loans?

Manufactured homes or mobile homes are normally financed like personal loans instead of real estate loans. The financing procedure is similar to that of a television or a car. However, due to the growing popularity of mobile homes, financing of mobile homes has achieved plenty of market.
To get a manufactured home loan, you typically need to have a good credit. At present, people with poor credit scores can qualify for these loans at a somewhat higher interest rate. Nevertheless, you would need to substantiate that you have a steady source of income and repayment ability to qualify for a bad credit mobile home loan. Lenders might necessitate you to own the lot where the mobile home is to be placed.

There are various lenders that offer loans for both the mobile home and the lot. On the other hand, there are lenders that just offer loans for the mobile home where you have to arrange for the lot by yourself.
Options for bad credit mobile home loans

The package for mobile home financing comes with various features such as adjustable or fixed interest rates, single permanent construction loans and finance of up to 95% of the home value. You can get affordable rates for short-term financing. In addition, you can get construction plans designed as per your convenience.

One of the options for financing mobile homes is the single permanent rate or one time close construction rate. This is a single step program and if you go for this option, then you can obtain a fixed interest rate throughout the construction period. Once the construction is complete, this would change into a permanent loan.

If you go for two-step option for financing mobile homes then you can take out a loan of up to 90% of the value of a vacation home and up to 95% of the value of the permanent home. This is derived from the prime rate throughout the construction period and would remain for a construction period of one year.

The third mobile home financing option is the lot loans. The lot loans are offered to people who have discovered the location to fix the manufactured home but are still to construct the home.

Watch out of Loan Fraud

Engaging in loan fraud is tempting, especially with loans that require very little or no documentation. However, loan fraud is bad news. It doesn’t just lead to a slap on the wrist; people go to prison for it.

And it’s not small potatoes. With the advent of the Internet, AUSs, identity theft, and each subsequent technological advance in mortgage lending, good old-fashioned crime finds new ways to get to the table. There are plenty of ways to commit loan fraud on an application, and they all involve the same thing—lying. The most common lie may be about income. In cases of mortgage fraud, it’s usually the borrower who makes arrangements with others to help pull the wool over the lender’s eyes.

Let’s say a borrower has paid his rent more than 30 days past his due date nearly every month for a year. Knowing that getting approved with such a lousy rental history will be tough, he makes arrangements with a friend to pose as his landlord. The lender then sends the ‘‘landlord’’ a form asking how much the borrower’s rent is and if the borrower has ever been late with his rent. If he was late, then how late was he?

Or the borrower fakes her income by changing some information on her paycheck stub or makes a fake W2. How does a lender combat such fraud?
Lenders have been around the block a few times. And no, the borrower just mentioned didn’t invent a new way to get around a bad rental history. Several years ago, a lender would accept a rental verification form from an individual just as easily as it would accept a mortgage rating from a credit report. Not anymore. Lenders now want something a little more than someone’s verbal or written verification.
Why? Well, let’s say it’s tempting to fudge a little when your credit history is less than stellar. A lender will now ask for 12 months’ cancelled checks. Not 12 months’ worth of checks made out to the fictitious landlord, but the front and the back of those checks, showing a cancellation date.

What, no cancelled checks? The borrower paid with a money order? Fine; let’s see the copies of the money orders. All 12 of them. I’m sorry, no copies? You sometimes paid with cash? Then we’re sorry, too. No loan approval.

It’s also not too much of a stretch to imagine a real landlord giving out a sterling rental history verification when the renter was anything but sterling. Why would a landlord do such a thing? To get that no-good deadbeat renter out of his rental house, that’s why. No, a lender wants to get just a little more than warm fuzzies when approving a loan.

Did the borrower provide a fake pay stub? Lenders can verify employment and payment history by making a phone call to the employer. There are even businesses that specialize in employment verification that the lender can call. Lenders can also get copies of previously filed tax returns when the borrower gives them IRS form 4506, asked for on almost every loan application.

Lenders get real serious when it comes to fraudulent loans. People go to jail, plain and simple. There are advertisements that promise to erase all your bad credit legally by having you simply ‘‘start all over’’ with a new identity. Sounds easy enough, right? But it’s against the law. It also goes against the mortgage application, which asks, ‘‘Have you ever been known by any other name?’’ If you say no, then you just lied on your application. Loan fraud has actually been made easier by the lenders themselves with the advent of low and no documentation loans, where applicants cross their hearts and hope to die that what they put on the mortgage application is true. Buying a house, moving in, and being paranoid that every time there’s a knock at the door, it’s the FBI isn’t worth it. There are so many loan options available that loan fraud simply isn’t worth it. If the loan is properly structured, almost anyone can get a mortgage.

What should i look for in a mortgage loan?

Get a loan that you feel comfortable with, one you don’t have to worry about, and one that is easy to get in terms of qualifying and cost. You can knock yourself out on that one. Fannie and Freddie make up about a quarter of all mortgages generated; the others are government, jumbo, and portfolio loans. But instead of trying to find the absolute best loan for your situation, first ask yourself if indeed you are very different from most other borrowers. Do you have good credit? Do you have a down payment? Do you have a job and can you afford the new mortgage payment? If so, there’s no reason to get cute about your mortgage.

Forget perusing through your mortgage lenders loan book exploring all the possible alternatives.Get a fixed or get an ARM. Fixed if you’re in it for the long term or are risk-averse. Get an ARM if you see this purchase as being short term, say three to five years. Get a hybrid if you’re in between.

Why such narrow choices? Pricing. Look at it this way, if the single most common item on the market today is available with most every lender on the planet, and if the loans are exactly alike, then what do you think that does to the price? It keeps it low. If more people are trying to sell the same product and it’s available twenty-four hours a day then you would think that such a commodity’s determining factor would be price, right? If a conventional loan is everywhere then the only thing you accomplish by trying to find something better is a wasted effort.

Can i "borrow" for mortgage insurance?

“Borrow mortgage insurance is another alternative to piggyback mortgages and mortgage insurance, called a ‘‘financed premium,’’ which you should review and compare. This program allows for the borrower to buy a mortgage insurance premium and roll the cost of the premium into the loan amount in lieu of paying a mortgage insurance payment every month. This program came about just a few years ago but for some reason it’s never really gotten off the ground.

However, when compared to an 80-10-10 program it’s worth examining further. Let’s look at a typical transaction on a $200,000 home with 10 percent down. With an 80-10-10 program the first mortgage amount would be for 80 percent of $200,000, or $160,000, with the second mortgage at 10 percent of the sales price, or $20,000. Using a 30- year fixed rate of 7.00 percent on the first, and a 15-year rate of 8.00 percent on the second mortgage, the payments work out to be $1,058 and $189 respectively, for a total payment of $1,247. With 10 percent down and a monthly PMI premium, the mortgage payment at 7.00 percent on $180,000 would be $1,190, with a mortgage insurance premium of $36, for a total of $1,226.

Comparable deals in price with the exception that mortgage insurance is not tax deductible whereas both the first and second mortgages can be. Now look at paying for mortgage insurance with one premium and rolling that premium into your loan. With 10 percent down the financed premium amount cost is around $3,780. Add this number into your principal balance of $180,000 and again use the 7.00 percent 30-year rate. The new loan amount will be higher, and yes, you’re adding to your principal, but now you have one loan at $183,780 and a payment of $1,215 using the same 30-year note rate of 7.00 percent. Two things are happening here. First, the payment is lower than the other two options of 10 percent down with monthly mortgage insurance, and second, the interest on the full $1,215 payment is now tax deductible, whereas a monthly mortgage insurance payment is not.

There are some detractors of this program, but really the only drawback is that it adds to your principal balance, and the cost of that $3,780 spread over thirty years gets expensive, adding over $5,000 in additional interest. True, but there are also financed mortgage insurance programs that are refundable when the loan is refinanced. This is such a solid program I’m not certain why it’s not more popular. As a matter of fact, I used this very same program to buy my first home in Austin.

Types of mortgage loans (1)

Mortgages come in all shapes and sizes. You can see the ads on television or read about them in the newspaper:
‘‘We have over 500 loans programs from which to choose!’’ I can recall working for a mortgage company that had rate sheets for its consumers that were eight pages long with over 125 different loan programs.

Why all the loans?

There really aren’t that many types of loans at all. It’s just that lenders like to make it appear that they are giving you more ‘‘choices’’ than the other lender. But in reality, loans come in two types: fixed rate and adjustable rate.



Fixed Rates
Fixed rates are easy to explain. You get an interest rate when you take out your mortgage, and it’s fixed. It doesn’t change. Ever. Easy enough, right? The only thing you need to decide about your fixed rate is what the rate will be and over what period you’d like to amortize the loan. The amortization period is the fixed period over which your loan will be paid back.

If your amortization period is 20 years, then your loan will be paid off exactly in 20 years and your monthly payments will remain the same, fixed, throughout the life of the mortgage.

Amortization periods can be anything the lender is willing to offer, but if a lender wants the loan to conform to Fannie Mae or Freddie Mac standards (discussed later in the book), then it will be amortized over 10, 15, 20, 25, 30, or sometimes 40 years. The differences between these loans are the rate and how much interest you will pay over the life of the loan. The longer the loan term, the lower your payment, simply because you’re taking a longer period to pay back the lender.

For example, on a $100,000 15-year fixed-rate mortgage, you might get a rate of 5.00 percent. That means that your payments will be $790 per month. After 15 years, you will have paid the lender a total of $142,342. That means that the lender made $42,342 in interest charges.

Borrowing the same amount for 30 years at 5.50 percent works out to a monthly amount of $567. Over 30 years, that adds up to $204,120; the lender makes $104,120 off of you. Yes, the monthly payments are lower with a 30-year loan, but over the long haul you’ve paid more than twice as much interest.

Another point to consider with loan terms is the amount that goes to principal and interest each month. With fixed-rate mortgages, most of the initial payments go to interest, with very little going to principal. But when the loan term is shortened, say from 30 years to 15, you also pay down your principal more quickly.

Using the same information as in the previous example, after 5 years the loan balance on the 30-year loan is $92,316. You’ve paid down your original mortgage only $7,684. With the 15-year loan, your balance is $74,076, a difference of $18,240 after just 5 years.

There’s a trade-off with amortization. Lower payments also mean slower loan paydown. Fixed-rate loans can also have another feature called a balloon. With a balloon, the loan comes due in full after a predetermined period has elapsed. Many conventional loans with balloons come due after five years and are called ‘‘thirty-due-in-five,’’ written as ‘‘30/5.’’ Again using the previous example, after five years your loan balance of $92,316 becomes due, all of it, to the lender. The loan has to be refinanced or paid off in some other way to avoid the balloon payment. Who would want a balloon payment?

Lenders offer balloons because they can offer a reduced interest rate. And these loans are particularly attractive if borrowers don’t think they’ll have the mortgage that long anyway. The interest rate on a 30/5 might be 5.25 percent instead of 5.55 percent.

There’s another version of a fixed-rate loan, sometimes called a ‘‘twostep’’ or a 5/25. This loan offers a reduced initial rate for 5 years, then makes a one-time adjustment to another rate for the remaining 25 years. There are also two-step loans called 7/23s that work similarly.