Category: Mobile Home Loans

‘How do I get a home equity loan on my mobile home with bad credit?’

Most people don’t realize that mobile home loans behave very much like traditional home loans. That might come as a surprise since mobile homes can ‘pick up and move,’ but it’s true. Mortgages for mobile homes have a lot of the same characteristics as loans on houses that are ‘stuck,’ including the ability to borrow money against their own value. It’s true – mobile home equity loans are a very real thing, even if you have bad credit. The only real difference between an equity loan you’d take out on your mobile residence and the kind I’d take out on mine will likely be the difference in amounts. Since single family homes tend to be a lot more expensive, there’s just simply more equity to borrow.

So let’s talk about what you’ll have to go through as part of applying for a bad credit mobile home equity loan. First the lender will want to know what year your home was manufactured in. That’s logical enough, given the fact that mobile homes are going to deteriorate more over time than a single family home would. The older your home, the lower its value is likely to be, which means there won’t be as much equity for you to cash out.

The bank will also want to know exactly how bad your credit is. There’s a difference between having missed a few credit card payments and something more major like having gone through a home foreclosure at some point in your life. If you’ve ever had a foreclosure, I’m afraid you’ll find it tough to borrow any of the equity from your mobile home. It just makes you too much of a credit risk. Now, that doesn’t mean that you could never get the loan after going through a foreclosure – you just might have to have a co-signer whose credit is much cleaner than yours.

Another key part of the application process will be how much of a balance – if any – you have on your home loan now. This is where loans on mobile homes are similar to normal mortgages; if you owe too much the bank isn’t going to want to let you increase the total indebtedness on the home by cashing out some of the equity. Hopefully your home is free and clear, and relatively new, so your chances of borrowing a decent amount are increased.

Finally, before anyone will give you a home equity loan for a mobile home with bad credit, they’ll want to know what type of property your home sits on. Is it in a mobile home park? On family property? Other rented land? If your home sits on property you actually own it’s going to be much easier to get the loan you’re looking for.

Be persistent. It’s likely that lending will be tighter from now on, with banks looking more carefully than ever at your income and credit history before giving you any kind of loan. You might have to spend a few months or even a year making yourself look good enough on paper for them to lend you the money.

Bad Credit Mobile Home Loans

You know, some people would say that you’re just about as low as you can get if you’re looking for bad credit mobile home loans – but they’d be wrong. My husband and I went through a period early in our marriage where we were both unemployed, and we got a couple of payments behind on our single family home. Soon we realized that we were in over our heads with that house, so we sold it (luckily real estate was still in good shape at the time).

Unfortunately, our credit was now fairly severely damaged, so renting was our only option for the time being. For the next two years we went to work on two things: saving money for a down payment on another home, and repairing our credit as best we could. We were a little discouraged, but we knew if we persevered we’d be able to get back into our own place at some time in the future.

After two years we had done a pretty good job improving our credit (both of us were around 600 Fico scores), and we’d saved about $20,000 for a down payment on a new home). Only one problem – $20,000 wasn’t going to be a big enough down payment on most homes, and 600 Fico scores still made most lenders wary of us. We soon realized that looking for a mobile home might be the answer, and we hoped to find a mobile home loan for bad credit that would let us get back into the world of home ownership.

As a sidenote, you should realize that mobile home doesn’t always mean ‘trailer.’ There really are some beautiful mobile homes out there – I should know…I live in one :) – and it’s just a question of finding the right community to put your home in.

So my husband and I started to shop for the right mobile home and the right place to put it, and we found one that was just $74,000, in a brand new mobile home community in a nice part of our town. We were thrilled.

As we began the loan application process, we got even more excited. We found out that the combination of our moderately improved credit scores along with our down payment was going to make it fairly simple to get the loan we needed. The interest rate would end up being around 10%, which is pretty high, but we didn’t mind because we knew that we were going to be buying our own place.

We also knew that the credit agencies really love to see regular payments made on a mortgage of any sort – nothing will boost your credit faster.

So for us, a mobile home was the solution to some real challenges in our financial life, and we couldn’t have bought it without a mobile home loan for bad credit.

Mobile Home Loans

Now that mortgage providers in the US have tightened up their lending practices so much, most prospective home buyers are going to have to come up with at least a 20% down payment in order to qualify for any kind of home loan at all. Average home prices on a reasonably sized home are almost always going to be over $200,000 – so most people will need upwards of $40,000 to begin their American dream of home ownership. That’s just not realistic. Some are downsizing their dreams slightly by looking into purchasing a mobile home, which means they’re investigating mobile home loans.

What most don’t realize is that mobile home financing isn’t all that different from a traditional mortgage. You’re most likely still going to have to come up with a down payment, have a decent credit score and history, and be able to prove an adequate income to handle your payments.

That being said, mobile home loans with bad credit do exist. The terms aren’t going to be as appealing, and your payment will likely be higher, but you could still qualify for a loan under the right circumstantces. One way to get mobile home financing for bad credit is to ask a trusted friend or relative to co-sign with you. There are some real advantages to doing this.

First of all, if your co-signer has decent credit you’re going to qualify for a more favorable interest rate and therefore a lower payment. Secondly, the credit reporting agencies really favor people whose names are on a mortgage, so your credit score will improve quickly as you make your payments on time.

But what about mobile home refinancing? If you’re already in the process of buying your mobile home and you need to go through the refi process, you’ll find plenty of mortgage companies to help you out. You’ll be able to choose from refinancing your mobile home with cash out, refinancing for a better interest rate, or both. Maybe you had poor credit when you originally bought your home, but several years might have passed and now your fico score has improved to the point that you’re ready to get a new low rate mobile home loan.

The point is you shoud thoroughly research your options and then choose the loan that’s right for you. Make sure you investigate several lenders – competition works on your side in the world of mortgages. Don’t settle for anything less than the best possible interest rate and fee structure.