Mobile Home Loans

A mobile home is a movable dwelling that is typically situated in rural areas, either on an owned or rented lot. Similar to a fixed, built-in house, a mobile home is equipped with all the amenities; only at a limited space and much lesser acquisition cost. Some people may not understand the need of having a mobile home because their lifestyles do not require them to travel from one place to another. For travelers, acquiring a mobile home is the best solution for an affordable and comfortable lifestyle despite the frequent need to travel. Now they need not rent apartments or houses and instead park on areas designated for mobile homes.

Like built-in houses, a mobile home owner needs to implement repairs and improvements over its body and amenities. To obtain funding, the mobile home itself can be used as collateral for mobile home loans. This type of loan is extended by credit companies and lending institutions. Under a mobile home loan application, credit companies will initially investigate if the mobile home is in fact the principal residence of the borrower, prior to processing of the loan application.

There are two categories of mobile home loans. One is limited only to the mobile home as a form of security and the other category utilizes both the lot and mobile home as collateral in the agreement.

A mobile home loan without land as collateral is usually used for improvements on the mobile home itself. The amount extended is limited only to the construction and repairs of the mobile home which includes the cost of materials. This type of loan is deemed quite risky for lenders because mobile homes location is hard to track unlike an immovable property such as land which definitely secures the credit and reduces pertinent risks.

The reason why lenders are unwilling to extend mobile home loans is the likelihood that the borrower will default on payments and become untraceable following release of funds. This being the risk, the lamely secured mobile home loan is not extended by most credit companies and lending institutions. Creditors extending this kind of mobile home loan strictly require a number of documents prior to approval. The second type of mobile home loan where land forms part of the collateral and is enclosed in the agreement get better chances of approval because this arrangement expose creditors to a lesser amount of risk. A higher loan amount will also be approved considering the valuation of the land.

There are certain requirements that a lender may impose on an availee of a mobile home loan prior to its approval. The foundation is the most common requirement which involves affixing the mobile home to the ground; thereby removing the attached hitches, axel and the wheels. Other lenders would even require the construction of a concrete foundation. This is necessary so that a fixed property will form part of the agreement. The mobile home should also be in excellent shape when turned over as collateral. The heating, air conditioning, and plumbing systems should be functioning as well.

When applying for a mobile home loan, the applicant must be aware that the proceeds are always lower compared to that of an ordinary home loan and that the set of requirements are different. Before taking up a loan, it is necessary to shop around for rates and charges from creditors and lending institutions in order to get the mobile home loan that best fits your need for funds.