In 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, although similar, are two distinct alternatives that appeal to many homebuyers. The unique way they are structured, their affordability, and mobility make them attractive to own.
When looking to buy a ‘mobile home,’ it’s easy to get the terminology confused. To most of us, a manufactured home and a mobile home are considered to be the same thing. You might even put modular homes, RVs, and trailers under that umbrella. However, they are all technically different.
Regarding traditional mobile homes and modern manufactured homes, they are different in a few major ways. If you’re in the market to buy a mobile or manufactured home, you need to understand the differences between the two and your options for financing each.
When Mobile Homes Became Manufactured Homes (1976)
Although mobile homes and manufactured homes share a similar interest from home buyers, they differ greatly from the perspective of housing regulators. Mobile homes are considered outdated structures with lower-quality building standards, whereas manufactured homes adhere to newer, higher-quality standards for dwellings.
In 1974, the National Manufactured Housing Construction and Safety Standards Act was established. It provides a clear distinction between mobile and manufactured homes to help protect homebuyers from poor-quality buildings.
Mobile homes are now considered those built before June 15th, 1976, while 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 heavily 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
- House system standards for electrical, plumbing, heating, and air conditioning
- Overall quality
Each manufactured home must meet standards in these areas to be considered safe for the home buyer. Mobile homes, constructed before June 15, 1976, were built with less regulation, leaving mobile homeowners more susceptible to safety and other property risks.
Mobile / Manufactured Home Mobility Factors
– Mobile Home
Mobile homes are considered fully mobile because they are designed to be moved relatively easily. Instead of being permanently attached to a traditional home foundation, mobile homes use tie-downs to keep them in one place for an extended period.
Once a homeowner is ready to move on to the next location, the tie-downs are removed, and the home is attached to a truck or trailer for transport.
– Manufactured Home
Manufactured homes, on the other hand, are designed to be easily affixed to a permanent foundation. Some homeowners opt to set a manufactured home on top of a pre-built basement, while others use a concrete slab as the foundation for the home.
Because a manufactured home is a permanent structure that is initially moved on site, and potentially in the future, housing codes require it to be built on a permanent chassis.
Mobile / Manufactured Home Financing Options
– Financing a Manufactured Home Attached to a Permanent Foundation
The combination of the required permanent chassis and other high-quality building standards gives prospective buyers more conventional options for financing a manufactured home purchase.
Most lenders offer conventional fixed and adjustable-rate mortgages with long-term repayment options for manufactured homes that are or will be affixed to a foundation on land the homebuyer is buying or already owns. You can usually acquire these loans through a manufactured home dealer, specialty lenders, your bank or credit union, an online lender, or your local mortgage broker.
– Financing a Mobile Home Without a Permanent Foundation
Mobile homes and manufactured homes without a permanent foundation may require financing that resembles an auto or personal loan.
Because these homes are not considered real property, and the homeowner likely doesn’t own the land where they reside, lenders are less apt to offer a traditional mortgage loan to finance the 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 don’t accrue as much equity as more traditional, manufactured, and modular homes do, which is an important distinction for lenders over time.
Final Thoughts on Mobile versus Manufactured Homes
Buying a pre-built mobile home, manufactured home, or modular home can be a smart financial choice as an alternative to purchasing a more expensive stick-built residence, but there are several factors to consider.
Ensuring the quality of your ‘mobile’ home meets current federal housing standards for the purchase and having a plan for a permanent foundation or basement before you buy will help you obtain the best financing available. It will also ensure a better resale value.
Taking these steps will assist in the financing process, ultimately making your home loan more affordable.