How to get a Mobile Home Refinancing Loan
It is possible to refinance a mobile home in the same manner as a traditional home, as they are both based off of the same principals with just a few differences. The reasons why a person may opt for a mobile home refinancing loan is pretty much the same reason that a traditional home owner will refinance their mortgage rates. It is usually to take advantage of current refinance mortgage rates or to get some cash out of the equity to pay off other debts or financial obligations.
There are a few things to watch out for when refinancing a mobile home. There is a term known as LTV or ‘Loan to Value’ that is considered when the mobile home is being evaluated. This is basically an evaluation of the property value in relation to the amount of refinancing that is possible. In other words, the LTV is an allowable percentage that can be loaned based off the entire current value of the mobile home.
Mobile Home Refinance Loan
Lets say that you are looking for a mobile home refinancing loan and the value of your mobile residence is estimated at 40,000 and you only owe 30,000 left on the mortgage. Now let’s assume that the maximum percentage allowable from the lender (LTV) is at 90%, this means that it would be possible to refinance your mobile home at 90% of the amount already paid, which in this case would be $10,000. Therefore 90% of $ 10,000 would equal to $ 9,000 in your pocket which can be a substantial sum to help pay for other things.
When looking to refinance a mobile home, it is important to consider the costs and fees involved with getting a new loan. As with traditional mortgage refinancing, there are some important questions to consider such as how much money would it actually be possible to pocket after all of the finance charges and fees that are normally associated with refinancing?
Another thing to consider is unlike a traditional home, a mobile home will depreciate in value over time. In some states, it is only possible to get a cash out if it is a double wide structure built after 1976, or if it is a single wide home built after 1991. In most cases a mobile home refinancing is only possible if the structure was constructed after 1991 as of the time of this writing.
It is also important to remember that if you choose to sell your mobile home after refinancing, you will end up owing more than what you paid for it. Of course being able to refinance your mobile home when in time of need is a better option than facing a foreclosure and losing everything while also destroying your credit in the process. It would also be fair to mention that many traditional homes have also lost property value during the housing and mortgage crisis that has plagued the nation in recent times.
As in a traditional mortgage refinance, it is always in the consumer’s best interest to shop around as much as possible when looking for a refinance loan, as the finance charges can vary somewhat between lenders. Always go with a mortgage broker as opposed to approaching a bank for a loan as well. Banks do not have to disclose how they determine what rates you qualify for and often will mark them up. Brokers on the other hand , have to conform to federal mortgage disclosure laws that are designed to protect the consumer from falling prey to predatory lending tactics.
However one must still do as much due diligence as possible to secure the best interest rates available, regardless of consumer protection laws. Always get at least 3 quotes and present them to each lender you approach. Play them against each other to try to shave off as much interest and fees as possible before signing that loan contract.
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