Have you ever been on the interstate and seen sections of a house or even the fully assembled real deal going by on a flatbed truck? What you were witnessing was the transportation of a manufactured or modular home.
Sometimes manufactured homes are confused with modular homes because the word “modular” implies prefabricated and moveable – however, there is a difference.
Manufactured and modular homes each have their own unique characteristics, advantages and disadvantages. There are also factors to consider if you’re looking to get a loan on these kinds of properties.
Manufactured or mobile homes come from the factory either whole or in a few parts. They’re built on a permanent chassis and have wheels for transport, which are detached when the home reaches its location.
Because of the nature of these manufactured homes, it’s possible to move the home elsewhere, but the area must be zoned for that particular mobile home structure type.
One of the good things about mobile homes is that they’re often a more affordable entry point into homeownership. According to the Consumer Financial Protection Bureau (CFPB), a basic single-section home could cost less than $20,000, whereas a home with a custom design might cost $100,000 or more.
Manufactured housing is completely fabricated in factory conditions and inspected at each step in the process. They’re manufactured based on codes set up by Department of Housing and Urban Development (HUD). One of the primary ways to identify a manufactured home is by its HUD tag.
There are some complications to getting a mortgage on a manufactured home. Some dealers and local lenders may offer financing. Quicken Loans doesn’t do financing on mobile homes, and only a few lenders offer mortgages on this type of housing. Fannie Mae and Freddie Mac do offer conventional loans for manufactured housing, and loans through the FHA are common because of different underwriting standards. Loan amounts vary depending on whether you’re getting a loan for the home itself, the lot or both. The term of the loans can also vary.
Another disadvantage of going with a mobile or manufactured home is that depending on whether you own the land, mobile homes can depreciate similar to the way cars do, unlike other homes whose values move up or down based on market conditions.
Modular homes consist of several parts that are prefabricated offsite. Once they’re transported to the home’s lot, they’re placed on a permanent foundation and assembled. Once on the permanent foundation, they look and function the same as a traditionally built home.
The key distinguishing features that separate a modular home from a manufactured home are the modular home’s permanent foundation and lack of HUD tag certifying it as a manufactured or mobile home. Modular homes are made and assembled according to local standards in the area where the home will be placed.
Modular homes also have values that tend to go up or down right along with the rest of the housing market.
It’s fairly standard to be able to get a mortgage on a modular home. Most lenders, including Quicken Loans, offer financing on modular homes.
The difference between manufactured and modular homes can be a bit confusing, so if you still have questions, let us know in the comments, and we’ll do our best to answer them. If you think a modular home is right for you, go ahead and get in touch with one of our Home Loan Experts – get started online or call (888) 728-4702.
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