30 Tips for Buying and Financing A Manufactured Home Buying and Selling a Manufactured Home Buying a new home is stressful and exhilarating! A mobile or manufactured home is a major purchase and as a consumer you should take the time to educate yourself about every aspect of the deal. You can avoid potential pitfalls and make a decision you will not second guess in the future. Education and negotiation will always be your greatest weapons to get the best deal. Manufactured home dealers are similar to a car dealership. They use the same mark-up and commissions system. Knowing your target price, finance options and being ready for the dealers maneuvers is your best strategy against it. Here are a few tips to help you save money, time and avoid unnecessary problems. Know What You Want In A Home First off: Do your homework. Reading this article is a great start but don’t stop now. Research everything and use as many different resources as possible. Know what manufacturer you like best, your favorite floor plan and features. Upgrades increase the price but you can save money in the long run with upgrades like thicker walls and insulation. Features and Upgrades Certain features and upgrades can drastically extend the life of your home and make living in it more cost efficient and comfortable. Choose a shingled roof, rather than a flat roof, if possible. Make sure the roof hangs over the edge of the house, that it is properly ventilated and it extends over the home, this will increase the longevity of your new home. Look for a home with exterior wall studs 16 inches apart. Choose vinyl siding rather than metal or hardboard siding and with exterior walls at least 7 1/2 feet high. Choose high-quality plumbing fixtures, such as standard kitchen and bathroom faucets and sinks (this may require an upgrade). Request a shutoff valve at each plumbing fixture. Avoid particleboard sub floors. When it gets wet, particleboard is more susceptible than plywood to problems such as swelling, warping and loss of strength. Larger joists, smaller joist-spacing, and thicker subflooring can reduce floor flexing and sagging. Research, Research, Research Although you may have chosen your favorite manufacturer, you may get a better price from a different one. Use online reviews and ask for customer testimonials. Getting the best price for the features you want is just as important as after sale customer service and good references from the companies past purchasers. Of course pretty is important but longevity and service is more important! Avoid pinning your hopes on only one home or one dealer. Get firm prices from several dealers and several brands either online or via phone, since dealer markups on homes can vary widely. Check the “blue book” value for a similar make and model from the previous year listed in the appraisal guides online. Know the prices of substitute housing options in your area, such as condos, houses, and apartments; this can help you place sticker prices (along with land rental and other required monthly costs) in a larger perspective. Investigate Financing Options Before You Set Foot on a Dealer’s Lot Investigate your financing options before setting foot on a lot. Check out banks and credit unions as well as traditional manufactured housing lenders. Traditionally, dealers finance mobile homes using personal property or chattel loans rather than mortgage loans, at rates 2-4 percentage points higher. Dealers often get a commission for obtaining credit for you, so you may be better off talking directly with the lenders. Even if you end up getting financing through the dealer, you’ll be able to negotiate better if you know your options. Same goes for insurance. Be sure to evaluate all costs of home ownership, including land rental (or purchase), financing charges, insurance, taxes, maintenance and more. Avoid wrapping costs unnecessarily into your home purchase loan. Interest rates on manufactured home loans that are not tied to land are typically several percentage points higher than typical mortgage loans. Think carefully about where you place your home. Placing your home in a rental community reduces the chances you will gain equity from your purchase. Even the best rental communities are subject to ownership changes and rent increases, which can add unexpected costs to your monthly budget. If you own the land, you can reduce your financing costs as well as increase the stability of your tenure. Price Comparison on Manufactured Homes Once you have chosen the manufacturer, features and the financing, start price comparing your local or state dealers online. Get firm prices from several dealers and several brands either online or via phone if possible, since dealer markups on homes can vary widely. Do not give your personal information to each dealer to run your credit, when multiple dealers check your credit it can actually reduce your score, ask them to give you a home price and estimate of the loan terms based on the credit information you give to them, notate names, dates and discussions. Check the “blue book” value for a similar make and model from the previous year listed in the appraisal guides online. Know the prices of substitute housing options in your area, such as condos, houses, and apartments; this can help you place sticker prices (along with land rental and other required monthly costs) in a larger perspective. First Visit to Dealer On your first visit to the dealer establish quickly that you are a serious and knowledgeable buyer, not just a browser. Don’t say: “I’m looking for a double wide.” Say instead: “I plan to buy a Clayton Celebration 3bdrm/2bth within the next month and I know exactly what features I want. I will buy where I get the best price. Let’s talk about it.” This puts you in control from the beginning. Know Your Budget It is important to buy a home that fits in your budget, not the home that a salesperson wants to sell you. That means watching the total cost as well as the monthly payment. Dealers may cite reasonable sounding monthly payments – but remember, the length of the contract can vary from 7 to 30 years. The interest rate can vary greatly as well. Higher interest over a longer term can more than double the actual cost of the home. Beware of… Don’t let the dealer coax you into naming a price or a monthly payment you’d be willing to pay. Ask for a total cash price, and negotiate from that. Better yet, ask to see the invoice price. Dealers may resist, but it is better to negotiate up from the invoice price than down from the retail price. Do not put money down on a home until you are 1000% positive that you are buying that home. You may have trouble getting your money back if you change your mind, especially if you ask for any customization. Beware of the Package Deals Shop around for each component of your package. Dealers may offer to act as your real estate broker, insurance broker, and mortgage company, but he or she may not be able to offer you the best deal on these services. You pay for items in a package deal – prepaid park rent, insurance premiums, even furniture and stereo systems – by adding the cost onto your loan. This will cut into your equity in the home. Given the relatively high interest rates on personal property and chattel loans, it will cost you more than the items are worth in the long run. Resist High-Pressure Sales Buying a home, any home, is a long-term commitment. Manufactured home contracts frequently require payments for 30 years. In contrast, dealers can get you approved and have the contract ready for you to sign in a matter of hours or days. Resist high-pressure sales techniques that entice you to “sign today.” Reputable dealers will still want to sell you a home next week. Be skeptical of “special” prices, freebies, and other enticements to sign quickly. Be prepared to walk away from the deal if you ever feel uncomfortable. Follow your gut instinct. If something doesn’t feel right, walk away. Have someone else with you that doesn’t have a strong emotional investment, they can sometimes see things that you aren’t able to. The Warranties Trap Manufacturers, retailers, installers, and component manufacturers may offer separate warranties, each of which covers a different part of the home. Consumers can have trouble determining who is responsible if problems after the purchase. In a recent survey it was found that people who purchased directly from the factory dealer had few problems after the sale than those that bought from an independent dealer. Find out what voids the warranty. Sometimes moving or selling the home can void the warranty, as can improper site preparation. Ask the retailer or manufacturer to examine your lot and certify that your site preparation meets the standards required by the warranty. Discover what, if any, regular home maintenance is needed to keep the warranty in force. Recently, we learned that one carpet manufacturer requires that you get your carpet professionally clean at least once a year to keep the warranty in effect. Little details are usually much more important than the larger ones, and small print is ALWAYS more important than larger print! Financing the Manufactured Home Once you’ve settled on a home and a price, you’ll sit down with the dealer to sign the purchase contract and loan documents. Carefully review the contracts, making sure the numbers (home price, interest rate, payment, points, charges, etc.) all are listed as you believe they should be. If they are not, don’t be afraid to leave and come back when the papers are in order. Stop and review the disclosures and warnings such as the “formaldehyde health notice.” Be prepared to halt the transaction if you do not agree with or understand anything. Beware of contracts that appear to charge you finance fees (origination fees, prepaid points, “buyer” fees) then appear to deduct these fees from the “Amount financed” as if you are not actually required to pay them. You will pay these, plus interest. If the dealer tells you that a family member with better credit must co-sign or even buy the home for you, that family member may end up the permanent owner of the home. Dealers may promise to change these arrangements in the future, but be unable to fulfill such promises. This has actually happened in my extended family. A son and his wife needed his parents to co-sign. They later found out that his parents names are the only ones listed on the contracts and it cannot be changed until it’s completely paid off. It’s a situation that’s best to stay away from. Get details of these “buy-for” deals, such as the date ownership transfers, in writing. Also make certain that all the blanks on the contracts are filled in when you sign them. When you leave the closing, take fully signed copies of the contracts with you. None of that “we’ll send them to you” stuff! Never sign any documents you do not fully understand. Do not rely upon representations made by the salesperson about these contracts. If you do not understand them, bring someone you trust with you who can explain them to you. Remember, a purchase contract is a legally binding document-don’t be afraid to wait until you have help if you need it! I hope this gives you a base to jump start your research. Buying a new manufactured home is truly a life changing event and should be considered as such. Please research and educate yourself further so that you may make the best decisions for you and your family. As always, thank you for reading Mobile Home Living! Resources: http://homebuying.about.com/od/homemanufacturers/ Note: Please do not just read this post and feel your knowledgeable enough, research several places and get all the info you can to feel completely in control. Some More Helpful Articles Home Loan Advice and Mortgage Tips (william15.typepad.com) First-Of-Its-Kind “Green” Manufactured Home Offered By Modular Lifestyles, Inc. (prweb.com) Top 5 Reasons to Buy a Home in 2012 (anthonybrunohomes.wordpress.com) Deducting Mortgage Interest FAQs (turbotax.intuit.com) To buy or rent: the dilemma (firstnationalrealestatemedia.com.au) Share with your friends and family!Click to share on Pinterest (Opens in new window)Share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on Google+ (Opens in new window)Click to share on Tumblr (Opens in new window) 5 Responses Gadgets, Mobiles and More July 29, 2013 I think this is one of the so much significant info for me. And i’m glad reading your article. But should observation on few general things, The web site style is ideal, the articles is in point of fact excellent : D. Good activity, cheers Reply vanguard ira review August 16, 2013 These fifteen tips are absolutely wroth learning. Maintaining a home since beginning till date we stay on the home is a tough job and a proper experience home owner can do that job quite nicely. By learning above mentioned effective tips anyone can take care of a new manufactured home perfectly. A decent sharing!! Thanks a lot. for keeping up. Reply homes Dubai September 21, 2013 If the spreads are right they can buy and lease for great cash flow. When I say the spreads I mean the spread between what a home would rent for versus your buy and rehab costs. Reply Gaston Parizeau May 27, 2015 I absolutely agree that one of the most important things when buying a mobile home is to do plenty of research, as the article recommends. A mobile home is a major purchase, and any major purchase should only be done with plenty of knowledge. A person should know virtually everything there is to know about a mobile home before making the decision to buy it so that there are no surprises later. Reply Gary Atchison June 2, 2015 Super helpful insider-info, thanks for taking the time to put this together. Knowing your budget is such a huge part of being able to finance your home, whether it be manufactured or not! Reply Leave a Reply Cancel Reply Your email address will not be published. Name* Email* Website Comment Notify me of follow-up comments by email. Notify me of new posts by email.