Cell house refinancing: mortgage choices and necessities

Refinancing a mobile or prefabricated house is possible

If you own an RV or prefabricated house, you probably already know that the mortgage rules for this type of property are different.

Some mobile homes can be financed and refinanced. Others cannot.

Your home loan options will depend on when your home was built, how big it is, whether it is attached to its foundation, and more.

If you can refinance your RV or prefab home, you can save a lot on your monthly payments.

Current refinance rates are at all-time lows and homeowners could potentially save thousands. Find out here whether you can refinance yourself.

Check your eligibility to refinance motorhomes (10.06.2021)

In this article (continue to …)

A note on terminology: Today's “mobile homes” are real prefabricated houses. This applies to any mobile / prefabricated house built after June 15, 1976. The terms "mobile" and "prefabricated house" are often used synonymously in today's financing of prefabricated houses. We'll use both in this article.

Requirements for refinancing a motorhome

Would you like to refinance your motorhome with a mortgage loan? If so, most lenders require your home to:

On lots you own On permanent foundations that meet HUD standards Titled Real Estate (Real Estate) Erected after June 15, 1976 Without axles, wheels, or hitch At least 400 square feet

Your motorhome must also meet the building standards of the US Department of Housing and Urban Development (HUD).

The home should have a HUD tag, which is a metal sign certification label that can be found outside the home (see below). It should also have a nameplate, which is a paper label that can be found around the house.

Without this HUD label, which should be attached to the outside of the house, a mobile home or prefabricated house cannot be financed or refinanced.

Check your eligibility to refinance motorhomes (10.06.2021)

RV loan options

Eligible RVs can be refinanced using a variety of mortgage programs.

Assuming the home is permanently attached to a piece of land that you own and meets the real estate requirements, you may be able to get refinance using one of these major loan programs:

Conventional Loans

Backed by Fannie Mae and Freddie Mac, conventional loans are best for borrowers with a credit score of 620 or more.

Homeowners typically need 5% equity in their home for conventional refinancing.

Both fixed rate and adjustable rate mortgages are available, with cash-out and limited cash-out refinancing in some cases. Loan terms can be up to 30 years.

VA loan

This from U.S. Department of Veterans Affairs backed loans offer extremely low interest rates for veterans and service members.

To qualify for a VA manufactured home loan, you typically need a credit score of 620 or higher and a maximum loan term of 25 years.

FHA loans

Prefabricated homes that meet HUD guidelines can be refinanced through the FHA loan program.

The Federal Housing Administration, which insures these loans, requires a credit rating of 580 or greater and allows repayment terms of up to 20-25 years for mobile / manufacturing real estate.

USDA loan

Mobile homes / prefabricated homes may be eligible for funding supported by the U.S. Department of Agriculture. USDA loans are only available in designated “rural” areas and the home must be less than a year old.

FHA option for RVs on rented lots

If you rent the land your RV is on, you're still in luck. You may be eligible for a mortgage loan under Title 1 of the FHA.

To qualify, you must:

Rent your property from an FHA compliant municipality or location

Remember, many landlords and RV communities do not adhere to FHA mortgage standards. Also, finding a Title 1 mortgage lender can be difficult.

Check your eligibility to refinance motorhomes (10.06.2021)

Who refinances RVs?

Not all lenders offer ready-to-use or home rental loans. Even if your property meets mortgage financing guidelines, you may need to find a lender to work with you.

A good option might be to reach out to a mortgage broker to help you find it.

Brokers work with multiple mortgage lenders and may be able to refer you to a lender who offers prefab home refinancing in your area.

Also, be aware that mortgage lenders enforce minimum loan amounts, which could potentially limit funding options for cheaper mobile / prefabricated homes.

Converting your mobile home into a property

One of the biggest steps in RV refinancing is converting your personal title to a real estate title.

To be eligible for a mobile / manufactured home loan, your home must be considered "real estate" and not personal property.

Mobile or prefabricated houses that do not meet the requirements listed above are considered personal property. As a result, you may need to make some changes to the home before you are eligible for mortgage refinancing.

Converting your RV title to property requires:

Proof of ownership of your motorhome Copy of the certificate of origin of your motorhome Deed of the land on which the permanent foundation of your motorhome is attached

This process is easier today in some states, including Virginia, Maryland, Tennessee, Nebraska, Illinois, Missouri, Alaska, Iowa, and North Dakota.

“You also need a foundation certification issued by a licensed civil engineer,” said Raymond Brousseau, partner at River City Mortgage.

"Also, the home needs adequate home insurance to qualify for a mortgage loan," he adds.

Mobile, manufactured, modular home? It makes a difference for refinancing

Nowadays, RVs are more commonly referred to as prefabricated or modular homes. In fact, the terms are interchangeable in the industry. However, there are minor differences that can affect the financing and refinancing options for your RV.

Brousseau explains:

A motorhome is a house that had or had axles and wheels. It is titled as a motor vehicle. "Real" mobile homes were built before June 15, 1976. A prefabricated house is built entirely in a factory; it is brought to the house in one or more parts A modular house is mostly built in a factory, but it is brought to the house in several parts to complete the construction. Once built, a modular home can no longer be moved

If your home is still technically “mobile”, it cannot be financed or refinanced with a mortgage loan.

However, if your home is on its foundation and counted as "real estate," it can likely be funded or refinanced.

If your home is pinned to its foundations and counted as "land," it can likely be financed or refinanced with a mortgage loan.

Technically, a prefabricated house built before June 15, 1976 is considered a real "mobile home". And those built after that date are considered prefabricated houses.

Many mobile homes are firmly attached to a foundation. These are a lot easier to refinance once you qualify. That's because they are called "real estate".

But mobile homes that are not permanently linked to a foundation are usually labeled and financed as "personal property".

Check your eligibility to refinance motorhomes (10.06.2021)

RV Refinancing: Mortgages vs. Home Loans

If your prefabricated house is owned, you may currently have a mortgage loan.

However, if your prefab home is labeled as private property, then you likely have a private home loan. These are also known as "Chatel loans" – and often come with higher interest rates than mortgage loans.

The Consumer Financial Protection Bureau reported that a few years ago about two out of three RV purchase loans were more expensive than mortgage loans. Many of these are charter loans.

"When you rent the location of your RV, the only financing option is often a home loan," says Brousseau.

If you currently have a personal home loan, if possible, you will need to convert the title and loan to a mortgage loan to refinance yourself at today's mortgage rates.

The good news? If you qualify, you can refinance either type of loan and likely benefit from today's lower interest rates.

However, if you currently have a personal home loan, consider converting the title and loan to a mortgage loan if possible.

That way, you can refinance yourself at today's mortgage rates, which are likely to be much lower than your current mortgage rates.

To do this, you need to own the land you are on and put the house on a foundation permanently.

Is it worth refinancing a motorhome?

Mortgage rates are ridiculously low today. In this environment, many homeowners who bought two years or more ago could lower their interest and mortgage payments by refinancing.

This could be especially true for owners of mobile and prefabricated homes.

Chattel loans usually have interest rates of over 7%. Refinance a mortgage loan and you can get an interest rate closer to 3% according to the latest Freddie Mac data.

That can save thousands over the life of the loan. Also, if you pay for personal mortgage insurance (PMI), you can refinance and eliminate it when you have earned enough equity in your RV.

Disadvantages of refinancing a motorhome

Qualifying for RV refinancing can be costly.

There are costs to complete the refinance to consider, and homeowners who need to convert a personal title to a real estate title will face additional upfront fees.

You may need to hire a real estate attorney or title company to help with this process. Also, after the conversion of your property, you may pay more property taxes than you would have paid for property taxes.

Additionally, putting your RV on a permanent foundation can cost a few thousand dollars, warns Brousseau.

Should you refinance your RV?

Crack the numbers. And determine how long you stay in your motorhome.

Assuming you're eligible for a lower interest rate, there's a good chance you can save by refinancing your mobile or prefab home – even if the upfront costs are factored in.

Not sure if you would qualify? You can contact a mortgage lender to verify eligibility to refinance your RV.

Loan officers can look at your individual situation to tell you if you are eligible for the refinance and how much you could save.

Confirm your new price (June 10, 2021)

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