This is not necessarily true for the rest of the nation. Researching this topic included interviewing a vice president of a Central Florida bank, the president of a Central Florida mortgage brokerage and communicating with Martin V. Lavin, an attorney with 30 years of experience in the manufactured home industry who has a specialty in lending and writes for the Manufactured Home Merchandiser.
First, understand that your manufactured home on a rental lot is considered the same as an automobile loan and it will be a chattel loan, whereas if your home is on land you own, your loan would be a more traditional mortgage.
I conducted my Central Florida interviews then communicated the findings on ease, availability and typical interest rates to Lavin. His response shows just how lucky we are in Central Florida when it comes to financing of a manufactured home, either a new one or a resale.
“Chattel lending in the national scene sees pricing much higher than you quote from local banks. Note I am speaking of chattel. Homes older than 10 to 12 years old are much harder to finance, and rates from MH lenders are in the 10 percent to 15 percent range, depending on home type, age of collateral, borrower credit, etc.,” Levin said.
“Loans could be up to 25 years, but normally less, again depending on collateral. On new homes the rates from MH lenders are in the 8.5 percent to 13 percent range, with terms of up to 25 years, and over 30 in some cases. I find it hard to believe there are rates as low as you quote on chattel loans. All loan rates I quote are fixed for the term without balloon. Seniors get no better rates except as their credit allows,” he added.
Let me tell you about the results of my local interviews. It is important to keep in perspective that both lenders I interviewed stressed that loans are based on the credit rating of the borrower and that they will hire appraisers to value the home for resale. New homes do not need an appraisal.
A poor credit rating can result in being turned down or facing a higher interest rate. Both lenders stated that they will use an appraisal service to value the home. They look at the past credit score, the equity the borrower will have, length of employment, and debt-to-income ratio, just to mention a few. Their repossession rate is insignificant as they have only repossessed two homes in the past 41U2 years.
I interviewed Don Burdett, senior vice president for retail banking at FloridaFirst Bank. The bank writes loans in all 19 branches encompassing Polk, Highlands, Manatee and Sumter counties. They currently average 20 to 30 mobile home loans per month with an average size of $50,000 to $60,000. FloridaFirst considers these loans to be a good source of revenue and less risky than auto, boat or unsecured loans. Burdett said “they are no different than stick-built homes and in lot of cases better built and better appointed.”
Here are some of the other factors they consider: Amenities of the park in which they are located, (for example, a golf course community has higher appraisals), age and condition of the home, sales appeal. They will lend up to 85 percent of the appraised value for 15 year loans, either on rented lots or owned land. Some loans are up to 20 years but for new homes only. Singlewide homes are given the same consideration as doublewides. They also like to refinance manufactured homes. Minimum loans are $2,500.
FloridaFirst has a 5-year balloon fixed rate loan with 4.95 percent that must be renegotiated after 5 years. This is useful for many, as FloridaFirst finds that most manufactured home loans are only on the books for 3 to 5 years. They also offer 5.75 percent, 10-year fixed loans and a 15-year fixed-rate loan of 6.25 percent.
In summary FloridaFirst is more active today in manufactured home loans. Their staff has received better training in this unique market and they want to increase their portfolio as much as possible.
I also interviewed Lynnwood B. Smith Jr., who is president of Mortgage Banking Associates Inc. Smith said he likes the retiree market, which is big in Central Florida. His firm has been in business for 26 years.
He says manufactured housing has the lowest delinquency rate, a quarter to a half of one percent. They will finance new or used manufactured homes (singlewide or doublewide) as well as refinancing an existing loan. They also offer home improvement loans up to 100 percent of the project up to 10 or 15 years at 6.75 percent or 7 percent based on credit rating. Smith estimated that up to 90 percent of all loan applications are approved. They like this business and wish to expand it as much as possible.
They cover Polk and Pasco counties. All loans are based on actual appraised value of the property along with the credit rating of IA installment loans the borrower. Most of the loans at Mortgage Banking Associates are on homes in rental communities. His firm handled 255 loans in 2002, mostly on resale of existing homes. In rental communities they will usually loan up to 85 percent of the appraised value and where the land is owned, they might go to 971U2 percent of the appraised value.
They have a wide range of loans to offer. For example, one is a 15-year fixed loan at 6.25 percent, and a 10-year fixed at 5.75 percent. They like to see 15 percent down on their land/leased loans. They also have several new programs for land/owned, with some featuring rates as low as 4.5 percent.
There are excellent loan options available for manufactured housing in Central Florida for those considering a new home or for owners who are selling and wish to help potential buyers find financing. Shop around and you will find lenders willing to consider the loan and at pretty good rates.