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Buying a mobile home: the advantages and disadvantages

Weigh the advantages and disadvantages of buying a mobile home and you may be surprised at your findings.

Is a mobile home a good fit for you?

Mobile homes. Prefabricated homes. Prefabs. Doublewides. Modular homes. Tin cans. Tornado magnets.

We’ve all heard the tags (and many more) that often get put on mobile or prefabricated homes. In some respects, this besmirching may be deserved for there is ample case history to highlight the questionable quality of many mobile homes. Some of this may now be changing as this dwelling model offers very affordable options and its quality of construction and appearance has changed drastically in past decades. This low-cost housing option no longer automatically equates to low quality. 

Weighing the advantages and disadvantages of buying a mobile home will help you decide if this housing option is for you. The choice really depends on your personal situation. It might help to offer an explanation of some of the differences (in definition and application) between mobile homes, manufactured homes and modular homes before. This can set the stage for a debate of the pros and cons of mobile homes.

Want a professional opinion? Talk to a local real estate agent.

Definitions and distinctions

Manufactured homes and modular homes are similar in the sense that some or all of their components are pre-built or ready made. There are a couple important distinctions to be mad, however.

Modular homes are generally fabricated in sections and assembled on site. Once assembled, they really aren’t mobile at all. You may have seen half of a modular home headed to its location being pulled by a heavy-haul semi truck.

Up until 1976, mobile homes were designed as complete housing structures that could be moved from a site or a park or community by either having wheels attached under it or having the unit lifted and loaded on a heavy-duty flatbed for transport. Mobile homes built after 1976 are technically classified as manufactured homes, though these terms are used interchangeably. While some are still "mobile", most are installed at a site in a manner that doesn't promote ease of mobility.

(The pros and cons discussed in this article are of mobile/manufactured homes built after 1976.)

Buying a mobile home – the pros

buying a mobile home2One of the first things going for mobile homes is initial price. With rare exception, mobile homes cost less than “permanent” homes built from the ground up. It’s not uncommon for a mobile home to cost 15 or even 20 percent less than a permanent home with similar space dimensions and amenities/fixtures. You can even find secondary market or used mobile homes at a fraction of the cost of a custom-built, permanent home.

For homeowners more interested in buying stunning property, or who live in an area where land costs are higher, a mobile home could be a good option. By reducing the cost you’ll be paying for the structure, you have more in your budget for land (and like they say, they aren’t making any more of that these days.)

Another advantage to manufactured homes is that they tend to have fewer ownership costs than many other housing options. If you own the land on which the mobile home has been installed, there’s a good chance you will be paying less in property taxes. If you don’t own the land (say your manufactured home is in a park or designed development) property taxes and any related fees will be rolled up into your maintenance fees or park charges.

Mobile homes tend to require less maintenance, especially if you don’t own the land. You won’t have to deal with the costs to install and maintain plumbing/sewer lines, gas lines, landscaping or other property-related issues.

There is also a surprising degree of diversity among today’s manufactured home options. Quality of construction and materials has generally improved and some homeowners are turning to this model to live a more eco-friendly lifestyle with a smaller footprint (carbon and otherwise.) For example, you can purchase micro-homes made from reconditioned shipping containers with a style reminiscent of the classic Airstream travel trailer. Other micro-home options help you reduce your energy use and overall cost of ownership (and in many cases, these homes are actually contributing energy back to the grid thanks to solar devices that pay for themselves and then some.)

Buying manufactured homes – the cons

For most people, buying a home is an investment as well as a way to secure, comfort and protect the people who will be living in it. This is perhaps one of the biggest drawbacks to buying a manufactured home – depreciation. If you purchased the land where your manufactured home is going to rest, the value of that land should increase over time. The value of your dwelling won’t (except in a few cases involving modular homes.) If and when the time comes for you to sell your mobile home, you can probably expect a loss (unless the value of the land has increased significantly.)

The decision-weighing impact of this particular con really depends on your personal situation. Your monthly payment on a manufactured home may be much less than rent in many areas. In fact, your loan payment, lot rent and insurance all combined may be less than rent. Plus, the interest you pay on that loan can offer you a tax deduction.

A manufactured home has pros and cons. One other downside to a manufactured home is that there may be fewer options for mobile home locations. There are some communities that present zoning challenges for people looking to place a mobile home. If you happen to buy or seek purchase of a manufactured home in a park or mobile home community, you may find the lots to be smaller and closer together (though the same argument can be made with some modern housing developments of permanent homes.)

More options for quality and financing

If you have an image of poor quality structures relegated to “trailer parks” when you think about manufactured homes, you may want to update that thinking. During the past 15-20 years, standards for quality and affordability have improved in the manufactured home market. In fact, this housing option is an excellent way to help address the challenge of offering affordable housing in communities that need it. It’s one reason why the federal agency responsible for overseeing and expanding the nation’s supply of affordable housing created a program specifically to address the concerns surrounding manufactured homes.

The Department of Housing and Urban Development (HUD) created and continues to operate an Office of Manufactured Housing. The Manufactured Housing Program is a national HUD program established to protect the health and safety of the owners of manufactured/mobile homes through the establishment and enforcement of the federal manufactured home construction and safety standards. The office also sets procedures for the administration of dispute resolution between buyers, sellers and manufacturers of mobile homes.

buy mobile homes3One outgrowth of this program has been the development of more loans to assist people looking to buy a manufactured home. The Federal Housing Administration (FHA) is a HUD agency that guarantees a wide range of housing loans designed to help people who may not normally qualify for financing. One such loan program is the FHA Title I Loan. Title I Loans can be sought by people looking to purchase a manufactured home.

A Title I loan may be used for the purchase or even the refinancing of a manufactured home, a developed lot on which to place a manufactured home, or a manufactured home and lot in combination. The home must be used as the principal residence of the borrower. The maximum loan amount you can apply for with a Title I manufactured home loan:

  • Manufactured home only - $69,678
  • Manufactured home lot - $23,226
  • Manufactured home & lot - $92,904

(These limits are as of August 2014 and the maximum dollar limits for lot loans and combination loans may be increased up to 85 percent in designated high-cost areas.)

The maximum loan terms for a FHA Title I manufactured home loan:

  • 20 years for a loan on a manufactured home or on a single-section manufactured home and lot
  • 15 years for a manufactured home lot loan
  • 25 years for a loan on a multi-section manufactured home and lot

(These terms are as of August 2014)

Buying a mobile home may be the right choice for you if your goals are preserve your savings, borrow less or invest in land. The manufactured home option may also be a great way to get more house than you think. It will serve you to discuss the pros and cons and your individual situation with a real estate agent and a mortgage lender, and Reply! can assist you by connecting you to one today.

Photo credits: (top) Raymondo166.

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