Mobile Home vs. Manufactured Home – Is There a Difference?

White metal mobile homeIn the housing world, there are a handful of options for prospective home buyers that differ from the conventional stand-alone, single-family residence. Mobile homes and manufactured homes are two distinct alternatives that appeal to some buyers given how they are structured and a less permanent feel. However, mobile home and manufactured homes are not one in the same. If you’re in the market for a mobile home or manufactured home (includes modular homes), it is important to understand how to two differ in terms of structure and your options for financing.

When Mobile Homes Became Manufactured Homes

Although mobile homes and manufactured homes share a similar interest from home buyers, they differ from the perspective of housing regulators. In 1976, standards were established to provide a clear distinction between mobile and manufactured homes in an effort to protect home buyers from poor-quality builds. Mobile homes are those built before July 1976, and manufactured homes are defined as those built after that date. There are specific differences in building codes for mobile homes and manufactured homes, with the latter now scrutinized for the following attributes:

  • Construction and design of the home
  • Strength and durability
  • Ability to transport the home
  • Resistance to fire hazards
  • Efficiencies in energy
  • Overall quality
  • House system standards for electrical, plumbing, heating and air conditioning

Each manufactured home built after 1976 must meet standards in these areas in order to be considered safe for the home buyer. Mobile homes constructed prior to this date are essentially unregulated in how they were built, leaving mobile homeowners bearing some risk.

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Mobility Factors

Mobile homes are considered fully mobile because they are designed to be moved with relative ease. Instead of being attached permanently to a traditional home foundation, mobile homes use tie downs to keep them in one place for an extended period of time. Once a homeowner is ready to move on to the next location, the tie downs are simply removed and the home is attached to a truck or trailer for transport. Manufactured homes, on the other hand, are designed to be affixed to a permanent foundation. Some homeowners opt to set a manufactured home on top of a pre-built basement, while others simply use a concrete slab as the foundation for the home. Although a manufactured home can be moved, housing codes require it to be permanently attached to a foundation or basement.

Financing Options

The combination of the required permanent foundation and the higher-quality building standards of manufactured homes give prospective home buyers more conventional options for financing a purchase. There are lenders that offer fixed and adjustable rate mortgages with long-term repayment options for manufactured homes; however, mobile homes may require financing that resembles an auto or personal loan. Because mobile homes are not permanent in nature, and the homeowner does not typically own the land they sit on, lenders are less apt to offer a traditional mortgage loan to finance a mobile home purchase. To offset the potential risk, lenders instead provide shorter repayment terms and in some cases, higher interest rates for mobile home buyers. Additionally, mobile homes do not often accrue equity like more traditional homes or manufactured homes, which is an important distinction for lenders over time.

Having a mobile home or a manufactured home can be a smart financial choice as an alternative to purchasing a traditional single-family residence, but there are several factors to consider. Ensure the quality of your home meets federal housing standards if you intend on financing the purchase, and have a plan for a permanent foundation or basement before you buy. Taking these steps will assist in the financing process, ultimately making your home more affordable.

Posted on May 9, 2017 by in Mortgages

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