10 Things You Need To Do When Buying a Mobile Home

1. Shop Around for Mobile Homes

Look at what’s on the market so you have a good sense of what a mobile home costs. In addition to the cost of the mobile home, there may be a land lease, and there will definitely be mobile home insurance costs, yearly taxes and any additional fees the mobile home community requires.

2. Choose the Right Mobile Home Type

Will you buy a new or a used mobile home? Unlike a traditional house or condo, mobile homes depreciate in value. Be prepared for that if you decide to sell the home down the road.

New homes come with warranties, while used ones will cost less but require an inspection, just as with any other property on the market.

There will be a wide variety of sizes and layouts for manufactured homes, so carefully consider how many bedrooms and bathrooms you will need.

An ideal mobile home will have energy-efficient features to save on utility costs, like special doors and windows, roof and siding insulation, a belly wrap to keep away moisture and pests and maybe even solar panels to conserve electricity if you have high energy bills. Mobile homes are, in general, more energy efficient than conventional homes.

3. Choose the Location of the Manufactured Home

Decide whether you want to live in a mobile home park vs living on private land: Each option has a different price tag. If you opt to live on private land, you may have to buy the land, lease it or rent it. The location of that land will determine its price.

Maintenance and zoning laws will differ from one option to the next, including different requirements for different mobile home parks. On some types of private land, you’ll be required to place the home on specific types of hard surfaces like concrete blocks or piers. Some zoning laws require a foundation.

If you decide to buy a manufactured home in a park, research the park’s rules, fees and amenities. Consider factors like utilities and proximity to services you may need.

Revisit your budget to make sure that you can afford to live where you prefer.

4. Explore Manufactured Home Financing Options

There will be different financing options depending on where you want to place your mobile home, such as a

• Personal Loan
• Veterans Administration (VA) Loan
• Chattel Mortgage (for mobile homes on leased land)
• Land and Home Loan (for homes attached to land)
• Federal Housing Administration (FHA) Loan
• USDA Loan
• Fannie Mae and Freddie Mac
• Dealership Loan

Land and home loans offer lower interest rates and longer terms than other options. FHA loans only require a 3.5% down payment. USDA loans require no money down.

You’ll find out how much you are able to borrow when you apply to be pre-approved for a loan. You’ll also learn which types of loans are available to you. You’ll definitely want to be pre-approved, otherwise, you may lose your home to someone who’s already approved.

The process of buying a home entails competition, and it takes a few days to a few weeks to get pre-approved. You may also want to get pre-approved in advance so you can clean up any credit issues, which may negatively affect your financing terms by bringing down your credit score. This includes payments in collections and unpaid bills. You may also find during this process that someone has opened accounts in your name, if you’ve been a victim of identity theft.

Some mobile home dealers offer financing, so you’d be making monthly payments directly to the dealer each month. If this is the route you choose to take, shop around for other financing options and compare prices first.

5. Site Preparation for a Mobile Home

If you’re buying a used mobile home, which already has the land or park agreement squared away, you will have little land preparation to worry about, unless you are able to add a garage or driveway and need to prepare the site for a delivery.

Those who have ordered a manufactured home will need to ensure that the land is prepared for the home. You may need to clear, grade and install utilities like water, electricity, septic system, heating and cooling.

Hopefully, you’re preparing the land well before the home is ready to be delivered. Having professionals help you prepare the land is highly advised, to protect your home. For instance, you’ll need to ensure the following:

1. The soil must be just right and able to bear the weight of the home. The climate you are in will greatly determine what you’ll need.
2. You’ll need anchors that will bear the weight of the home.
3. You’ll also need to choose the foundation type (slab, pier and beam, or crawl space) based on zoning laws and the mobile home’s requirements.

Clearing the area of foliage is the next step, if you’ve bought land in a woodsy area. Doing so is a good way to prevent fires from reaching your home, if the brush dries out during the hot season and ignites into flames.

Is the home situated in a flood zone or seismic zone? You’ll have to factor in these types of disasters when preparing to anchor the home.

Depending on local laws, you may need to hire an architect to build awnings, fencing or other items that will have to undergo a city building inspection.

You may also be required to have fire safety equipment in the home, like smoke detectors. Find out in advance if your home needs some upgrades to pass inspections.

6. Inspections and Appraisals for a Manufactured Home

Home inspections are an important part of any type of home purchase but especially for used mobile homes, to check for structural problems, plumbing, electrical systems and other failing utilities.

Here is where you’ll need to note any potential repairs and see if you can get the owner to subtract the estimated costs from the purchase price. This may be close to impossible in competitive markets, but if there aren’t any other buyers interested in the same home, you may be able to get the owner to agree to your terms.

An appraisal will determine the home’s market value, which is essential for securing financing and will dictate how much you pay in taxes each year. If the home is valued less than its appraised value, you may have to come up with the remainder because most lenders will only loan the appraised value.

7. Understand Your Legal Requirements

Registration and title of ownership will prevent future liens or legal disputes against the property. Make sure the title is transferred to you immediately after purchase.

Permits will be required prior to placing the manufactured home on the land or within a mobile home park. You will also need permits for modifying an existing mobile home if you’re buying used.

The procedures for installing a manufactured home are city and state regulated, so be knowledgeable about which rules apply to your situation before you begin installing. Otherwise, you’ll have a very expensive mistake on your hands.

8. Buy the Right Type of Insurance

HO-7 is the type of homeowner’s insurance you’ll need to insure a mobile home. You’ll want to buy adequate coverage to cover the structure of the home, your belongings and your liability if someone is injured on your property or gets bitten by a pet.

It’s important to shop around for an HO-7 policy before purchasing one, to make sure you get the most coverage at the best price. A comparison site like SmartFinancial will allow you to speak with a few agents, to see who seems like a better match for you, in terms of coverage and service.

See if you can get a discount by switching over your car insurance policy or policies. Multi-policy discounts can really help lower insurance premiums so you have a smaller bill to pay each month. Plus, it’s more convenient than handling multiple payments.

You’ll need a separate flood insurance policy and earthquake policy, if you live in areas prone to these types of disasters. If you live in a state that experiences tornadoes and hurricanes, you may have a separate wind deductible.

If you store items like diamond rings or other expensive items, like collectibles, at home, it’s wise to buy a rider for each item. Otherwise, you may not be fully insured by the contents portion of your HO-7 policy.

9. Familiarize Yourself With the Closing Process

Do a final walkthrough of the home before closing to ensure it’s in the agreed-upon condition, before signing the sales agreement of the mobile home. Make sure you understand all the terms and conditions of the contract.

Everything costs money, if you’re paying cash or using an escrow account. The good thing about the latter is everything is rolled into one lump sum which is then divided up per payment term.

Here are some of the costs you can expect to incur right away.

• Property tax payments
• Inspection and appraisal fees
• Administrative fees
• Mortgage origination fees
• Mortgage insurance (if applicable)
• Attorney’s fees (if applicable)
• HOA fees (if applicable)
• Title insurance
• Homeowner’s insurance

10. Consider Other Important Tasks

Make sure to arrange for the delivery and setup of the mobile home at a time when you will be there. You’ll have to set transportation, installation, and connection to utilities. If preparing the land is taking longer than initially expected, make sure to change your delivery and setup for all of the moving parts.

Buying a warranty is a good idea, but is only available for new homes. You can, however, buy warranties for any new appliances you buy. Make sure to understand the warranty coverage and how to claim repairs. For used homes, plan for any immediate maintenance needs or necessary upgrades.