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Double-Wide Finance

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Posted On: 07/10/2013

Question:

We bought a double-wide home in 2006. The house is located on property we own and sits on a foundation. We would like to refinance to a lower rate but everyone says our house is a "mobile home" and cannot be refinanced. Our current rate is 9.3 percent.

Answer:

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Almost 52,000 manufactured homes were produced in 2011; some are considered “real estate" and some are "personal property." The distinction is important because it affects what type of financing is available for the home.

To be considered "real estate," manufactured homes must have a permanent foundation, but there are other requirements as well. Generally, the house must have at least 400 square feet of floor space, it must be built after June 15,1976 and must be certified under federal rules for construction and safety.

According to the U.S. Department of Housing and Urban Development, "The mortgage must cover both the manufactured unit and its site and shall have a term of not more than 30 years from the date amortization begins."

Both the FHA and VA will insure financing for qualified borrowers who use the manufactured home as a primary residence.

According to the Manufactured Housing Institute, borrowers typically put 5 percent to 10 percent down for their loans.

Under HUD's Title I program, a manufactured house on a permanent foundation can get a home improvement loan for as long as 20 years. Title I loans have no prepayment penalty, and they can be as large as $25,090 for properties taxed and classified as real estate and as much as $7,500 for personal property.

Loans guaranteed by Freddie Mac are available for as long as 30 years. Such financing, whether fixed rate or adjustable, can be used to finance or refinance a qualifying manufactured home.

Speak to lenders regarding refinancing options. However, since you have owned the property since 2006, it may be that the best use of your money is to pay down or pay off your debt – but be certain to ask about prepayment penalties, if any.

Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to peter@ctwfeatures.com.

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