Over the years, there has been a rise in population, and an increasing cost of living has been rising, causing an increase in rent and other essential services. These effects have created a demand for affordable housing.
Moreover, there has been an increase in access to loans and credit; hence more people can purchase assets and liabilities, including manufactured homes. These trends have increased the growth of the manufactured homes industry by a small but significant percentage. In this new era, manufactured homes have made progress in innovation, and there are emerging trends of new designs and size options.
Differences between Modular, Mobile and Manufactured Homes
Mobile homes are the movable homes that were constructed before the HUD code on June 15, 1976. Manufactured homes are homes completely built-in industries and inspected for compliance with the Housing and Urban Development (HUD) construction codes. Modular homes are made in factories following state, local and regional codes where the home will sit. The construction is done in parts then assembled at the site. Once completed, a local building inspector verifies the set requirements.
How to Buy a Manufactured Home
Buying a manufactured home can be a good option for people who no longer want to pay rent and would want to settle in a place of their own. When buying a manufactured home:
• Establish the size of the home you would like. It will inform your decision on how much money is required.
• If you have limited resources, evaluate the financing options available and decide on which one to exploit.
• Acquaint yourself with the housing and urban specification and follow the set guidelines for laying the foundation
• Make a down payment and sign the required documents.
• Finally, ensure that your home is insured.
Lot and Foundation for a Manufactured Home
When thinking about buying a manufactured home, first prepare the land that the home will be placed. The manufacturer needs a foundation to lay the home. Unfortunately, manufactures do not offer the home with the land. Consider buying a piece of land if the savings you have can make a land purchase. Homeowners who do not own land can choose to lease land.
When choosing or laying a foundation, ensure that the drainage system is fixed away from the building to avoid damage caused by overland flow and moisture. The foundation to use is dependent on the train of the land and the homeowner's preference.
The type of foundation the homeowner chooses also determines the space of land be used. For a home to last long and be strong, you need to choose a good foundation. There are different foundations in the manufactured home industry.
Pier and beam foundation
In the pier and beam foundation, anchors are set into the ground. The straps are then connected to the anchors to make them firm. Anchors and strap prevent against wind forces. At times, the anchor and straps have stabilizer plates that prevent the top of the anchor from sinking when the house's weight is placed on them.
The pier and beam foundation is preferred because it is affordable, takes less time to install. It is suitable for areas with heavy flooding and frost.
Slab Foundation is popular and the most installed foundation. To begin setting a slab Foundation, concrete is spread on the ground a few inches from beneath the finish grade. Footers and layers of concrete blocks are then laid, and the internal pipes are fixed. Filler rocks are then added, and a final layer of concrete is added.
Slab foundations are preferred as they are easy to maintain and can be constructed within a homeowner's budget. That said, slab foundations may not always be the best option as they cannot protect the home from storms. They are also expensive to repair once they begin to chip.
This type of foundation is slightly lifted above the ground. Footholds from concrete are made and later set to accommodate the weight of the house. Footings are mostly used to prevent the homes from sinking and settling deep in the ground. Each home has a unique design, and therefore crawlspaces are set depending on the home.
The crawlspace foundation incorporates the use of piers and a perimeter wall to provide solid support. The benefits of choosing this foundation include affordability, wind resistance, and stability.
This type of foundation takes time to construct and is expensive. However, it is wind resistant and provides a large amount of extra space.
Cost of a Manufactured Home
Several factors will influence the cost of your manufactured home. Based on your location, design or preferred size of your home, will the cost of your home vary?
a. During winter, for instance, it is cheaper to buy a manufactured home than in summer in the Western Region. In New York, a median home will cost $669,500 compared to $99,000 in West Virginia.
b. The location determines site preparation cost, transport cost, permit fees, sales tax and land development tax. Dependent on taste and preference, the more customizations are done on the original design, the more exorbitant the price will be.
c. The size of your home will matter since the price per square foot is multiplied by your desired square footage to arrive at the final cost. The cost of a manufactured home ranges between $180,000 - $240,000.
Financing a Manufactured Home vs. Mortgage
Getting access to financing for a manufactured home is challenging than the mortgage with the argument that they sit on rented land and are movable. The risk associated with manufactured homes makes lenders charge very high-interest rates as personal property rather than real property.
The size of loans for manufactured homes is considerably smaller than the mortgage, essentially because you are not buying the land. For instance, a median size loan is $72000 for a manufactured home while that of a single-family home is $199000. Financing of manufactured homes takes different approaches; however, the most common are chattel loans, personal loans, and the FHA Title loans program.
i. Chattel Mortgage Loans
A chattel mortgage is a loan arrangement in which the movable personal item acts as the loan's collateral. In this case, the home behaves like security. In some cases, you might require to put down at least a 20% down payment, and the interest rates maybe 1 to 5 percentage points higher than the standard mortgage.
iii. Personal Loans
The use of personal loans is another way to finance manufactured homes. A personal loan is flexible and is used for nearly any purpose. The application process is faster with little paperwork, and usually, there is no need for any collateral. The lender has no control over your home since the home is not used to guarantee the loan.
ii. FHA Loans
The Federal Housing Administration has insured these loans with relatively lower down payments, relaxed credit score demands, and low monthly mortgage insurance. However, the buyer must identify and approach the FHA-approved lender and work out the terms. There are two programs that a home buyer needs to consider, the FHA Title I or the FHA Title II loans.
1. The FHA Title I is a loan for personal property, and it is not a must to purchase the land on which the home sits. A down payment might be as low as 5%. Nonetheless, they will attract fixed and relatively higher interest rates than the standard mortgage.
2. The FHA Title II requires that the homeowner purchase the home and the land altogether as real property loans. The homebuyer is required to erect a permanent foundation system on the land. The loan has longer duration terms up to 30 years and as low as a 3.5% down payment.
Disadvantages of Owning a Manufactured Home
a. They are mostly located in mobile home parks. It implies that you have to pay the monthly rental space fee to property management. Also, since you must comply with the park rule, the management may decide to evict you, leaving you with no option but to sell or move your mobile home.
b. They are likely to be more prone to damage in the event of a natural disaster since they do not have permanent foundations. The temporal foundation makes mobile homes more susceptible to calamities, such as earthquakes and storms.
c. The home is personal property, and unlike the real property that appreciates, manufactured homes depreciate. For the same reason, personal properties have higher interest rates and shorter terms of loans than a standard mortgage.
d. Mobile homes have negative assumptions that low cost may mean lower quality, cheaper building methods, and materials. Since they solve limited capital to buy, the perception of inability to pay for repairs and prorogue maintenance crops up.
Manufactured homes have become popular and widely accepted over the ages. They are affordable and provide an opportunity for the homeowner to enjoy private space and create memories with family. It is a good escape from the demanding bills and can be easily customized to suit your preference.