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Chattel loans (rhymes with "cattle loans") are the most common mobile home loans. It is the loan type used when the land the home sits on is not part of the loan package. If you don't own your home's land, you will likely need a chattel loan. Chattel loans typically have a slightly higher interest rate and a shorter loan period than a mortgage loan, plus there are some advantages. The shorter payback time reduces the actual dollars paid to the bank as interest; plus, it makes your home free and clear sooner than a more extended loan period. You don't need to pay for private mortgage insurance (PMI) with a chattel loan. Finally, you can put your home in a mobile home community that offers more amenities than you may be able to afford if you placed your home on your own land (such as a giant swimming pool). Since you are spending less upfront, your down payment will be less (often much less) than if you needed to finance a home and the land, not to mention the freshwater, sewer or septic, electric, and gas connections. The smaller down payment makes it easier for many people to get into homeownership with a chattel loan than other loan types.
Do you have a piece of land you own outright? Good news! You can use the value of the land toward your down payment. Your land will need to appraise high enough to meet the down payment threshold the bank wants, but you may not need to come up with additional cash for your down payment.
Yes, we help a lot of families with poor credit. Anyone with any credit score can get financing, BUT it doesn't always make sense to do so because the interest rate and required down payment may be too high. If you have a credit score over 500 and a decent down payment, usually we can find you acceptable financing, but the only way to know for sure is to apply for a loan. We talk about mobile home financing with poor credit in a blog post that goes into your options in finer detail. We usually suggest that if your credit score is super low and you have no down payment, you talk to the friendly team at Next Step who helps people take the proper steps to be ready to buy a home. Next Step is an independent nonprofit whose sole purpose is helping people get their finances in order so they can buy a home. If you are not sure whether or not you should try for a loan, feel free to give us a call and talk to one of our Housing Consultants about your specific situation.
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