This is a little bit complex, but bear with me and I’ll give you an overview of what is possible and what isn’t.
First of all let me say that we strongly recommend that you pay cash for your entire process and that is what happens in the majority of the homes we put in. Having said that, there are times that a loan is needed for part of the process and that has worked out for some of our clients. The following is information on it, but please understand that we are not lenders and you must get all that information from the professionals listed below.
For specifics as to applying for a loan, rates, etc., you must talk to a lending institution. By law, we can’t give you that information. However, we do have two sources that we recommend who our clients have worked with successfully in the past. Their contact information is at the end of this article.
For a replacement project to work out where you save the largest amount of money, you first need to own or purchase the lot (and older home) the new home will be built on. You cannot get a loan to both purchase the lot and older home as well as for the construction of a new home.
Note: for you to be able to get the totality of a new home and lot for it to be bundled into a financing package, a Manufactured Home Dealer would need to buy the lot and they would then mark-up the final purchase price significantly (up to $80,000 or more or whatever the market would bear). That is standard in the industry as they are assuming all the risk. When you are able to do it in the way described below, you save that mark-up.
We work directly with you as the homeowner, but for you to save the Dealer mark-up, you have to own the lot (and the older home on it). There are exceptions if you have lived there for some time and only have a small amount on your loan to pay off and the property has appreciated significantly–but you need to talk to your lender about specific cases.
Here is the typical process
- If you don’t have a lot, we can help you find a lot with an older home on it and you can buy it. If you already live in an older home you want to replace (or inherited it) you then go to the next step.
- You contact us and we can give you a rough estimate of the costs for putting on a new home. This will be a TOTAL, realistic estimate.
- At that point, you want to talk to a Lender (the contact and other information from the two we recommend is below).
- If the loan is approved, we will then write the contract and work out the payment plan with the lender.
- You will need to pay the upfront design and plot plan fees to us to proceed. This cannot be part of the loan. This is $6,500.
- If you have cash (which is always easiest and best), we simply write the contract and all the monies go into escrow.
- The escrow instructions will carefully detail the payouts of the monies, which must go to the factory for building the home, transport to bring it to the lot, the set-up costs (including lot prep and all accessory items such as driveway, shed, etc.), and finally the payouts to our company, Dealer of Record, taxes.
- Your home is built and you have a wonderful new home!
The two lenders we recommend
It is important to understand that you cannot use conventional loans or lenders for a manufactured home. You need to use a lender that is throughly familiar with the laws, regulations, and process. The two lenders below have helped MANY owners of manufactured homes and clients of ours.
The two lenders we recommend (further details follow for each) are:
Community West Bank–contact Will Cunningham
CRM–contact Lara Shanley
Here is the response of recent questions I asked Will Cunningham from Community West Bank
I cannot recommend him enough, not only from the satisfied customers who have used his services, but from personal experience—we got the loan on our mobile home from him.
In addition to this sheet, I will also be attaching the loan application he sent me.
Please direct any questions you have about loans directly to Will Cunningham. If he needs information from me, he will contact me for it, any additional home questions in general, contact me: firstname.lastname@example.org or 805-218-4858.
Hello Yvon, the basic breakdown is below (rates, terms, etc.) but as always, please feel free to ask questions or have clients call me directly if needed.
Here are your questions:
- If someone wants a replacement, but does not have their current home paid off.
- If on the lower end (we are doing some family park stuff) can you use 3 incomes (as is in the case in multi-generational homes)?
- What is the debt to income ratio you looking for? I’ve found that makes sense to people.
So, #1 – if a current, older home needs replacing and there is a loan on it, the home cannot be moved without that lender’s permission (or you risk ending up in court). So, this needs to be paid off with cash, or a refinance, etc. But the current lender (either old/current lender, or a new lender in a refinance situation) would have to sign off on the old home going to the dump. We do this if we have the loan on the old home, as long as the owners qualify for a new loan. So, step one is to check with the current lender and see if they will qualify the owners for a new loan and then allow the old home to go away. Step two is assuming that lender says no, have the owners qualify with us to refinance the old home and then we can approve them for the new loan at the same time. But, this is an expensive way to go, as it means double the costs basically.
#2 – Multiple borrowers are fine, if all living in the home. If not, that is a family assist which may still work if they are all family.
#3 – 45% is the best number to use. So, 45% of the gross income is their allowable debt load counting all credit cards, car loans, home loan, space rent, taxes and insurance on the home.
Here is the breakdown:
Hello and thank you for your interest in a mobile or manufactured home loan from Community West Bank. The best way to apply officially for a loan with us is to visit our website at https://communitywestbank.mortgagewebcenter.com/ when you are ready. Alternatively, you may print out and complete the attached PDF application, then send it in.
In addition, we will need the following items in order to process your application – these can be scanned and uploaded using the upload link here: Send me Files, or faxed, mailed, or dropped off at a branch near you. The fax number is 805-679-6569 anytime.
1) 2017 and 2018 Federal Tax Returns – all pages, all schedules (not State)
2) Any W2s and 1099s for the 2017 and 2018 tax years
3) Last two paystubs
4) Last two bank statements from all accounts (all pages)
5) Photo ID
6) Please be prepared to show where all the down payment and closing cost money will come from – this also will include a 2-6 month reserve (liquid funds) – and all this money will need to be shown as being YOUR money for the last 3 months at a minimum. Any large deposits in your account in the last 3 months will need to be sourced and shown as your money.
Here is a breakdown of the loan options we have:
Here are the loan options – normally we will lend up to 80% of the appraised value or purchase price – for this example I am using a $100,000 loan amount
I am just showing you an example of our loans at the best rates – you will need to qualify for the rates – rates and loan amounts are for illustration only. If the credit is not top notch, then the rates could be higher.
Option one – 25 (or 30) year loan. 6.25% fixed for the first 5 years, then it becomes a 1 year adjustable based on PRIME RATE plus 1.00% (Prime is currently 5.50%). Payment based on $100,000 would be $644.30/mo. (6.845% APR)
Now, the rate caps would keep the rate from moving too far too fast. So, the first adjustment has a cap of 1.00% maximum. Every adjustment after that would be capped at just 1.00% up or down from the last year, and the lifetime maximum cap is 5.00% above the start rate. So, maximum payment would be $925.54/mo given a worst case rate scenario.
Option two – Same as #1 but fixed rate is for 10 years and the starting rate is 6.75% (7.217% APR). So, this is a 25 year loan (or you can choose the 30 year term) with the first 10 years of the loan at a fixed rate. After ten years the rate will adjust to Prime Rate plus a small margin. The rate caps on this one are 2% max the first adjustment year, 1% max up or down every year thereafter, and 5% maximum lifetime cap over the start rate. The payments are $690.91/mo fixed for 10 years, and they max out at $909.61/mo.
Option three – 10 year loan. 6.375% fixed for 10 years –amortized over 10 years. The payment is $1,129.13/mo. (7.314% APR)
Option four – 15 year loan. 6.625% fixed for 15 years –amortized over 15 years. The payment is $877.99/mo. (7.30% APR)
Option five – 20 year loan. 6.875% fixed for 20 years – amortized over 20 years. The payment is $767.81/mo. (7.422% APR)
**if the home you are considering is older than 1990 then there will be an increase of .25% on the rate and margin. If the home you are considering is older than 1980 then there will be an increase of .50% on the rate and margin.- However, if your home is located in an “ownership” park, where you owe a share or the lot, then there is a .50% discount applied (never below the lowest rates).
Our fees would be 1.75% of the loan amount (or $1300 whichever is more) plus $1200 in normal flat bank fees (Processing and Admin). That’s $2450 minimum bank fees, could be more depending on how much you borrow. On top of that, there would be an appraisal fee, title, escrow, taxes, insurance, credit report, flood cert, etc. etc. Estimate on the high side.
Credit scores should be 660 or higher, and there is a discount in the rate at 740+ score (however, you can never go below the minimum rate on any loan). The income needs to be documented and consistent for the last two years or more. Down payment can come in part or whole from a gift or from a co-signor (family member only).
Age of the mobile home should not exceed 1970 (1969 or older are very hard to finance). Any mobile home older than 1990 will require a home inspection AND termite section one and two completed, and signed off on prior to funding.
I am here to help, so feel free to email or call me with questions
Send me Files – Please do not email documents, use this link instead J
Broker BRE #01300440
AVP/Loan Origination Team
445 Pine Avenue, Goleta, CA 93117
(805) 692-4359 direct
(805) 679-6569 fax
CLICK the following link to download the loan application: Application 2019 for Mobile Homes, Community West Bank
Information from CRM Funding, Contact Lara Shanley
Here is the overall current information she gave me. Below it are two important PDFs that explain things in more detail.
- New homes
- Good credit (they tell us, what defines that?) – 720+ fico
- The rates, down-payment needed? 5.99% – 20% Down
- Terms (does it matter how old people are?) we deal mostly with seniors, no it doesn’t matter
- Term of loans, etc. 25 or 20 year term
- About how long does it take to get a loan? 30 – 45 days
Click the PDFs below for more information: