Manufactured Home Refinance - Is It Worth It?

A manufactured home refinance is a great way to lower your monthly payment or pay off the loan sooner than you initially expected. Yet most people are unaware that refinancing can be done on manufactured or even mobile homes. There are however other reasons besides lower rates or quicker payoffs to consider this option. Perhaps you have debt you want to consolidate, or maybe you just need some cash for an expensive item like a car, or even paying for college.

In it's simplest terms, a manufactured home refinance is just a way of paying off the loan as it is now, and in its place taking out a new loan with terms that will work better for your situation. These terms typically mean a better interest rate, thereby giving you a lower payment each month, or shortening the length of your loan while keeping the payment the same. In other words, you can get out of debt faster.

The process for mobile homes is slightly different. Yes you can refinance it whether you happen to be located in a mobile home park or on your own piece of land, but the laws for this will vary from state to state. That's why you should meet with a local lender to find out the options available for refinancing a mobile home. He will surely know all the laws and how they apply in your state.

Just like when you purchased your manufactured or mobile home, you will have to pay some fees and closing costs. The closing costs however will give you options. You can either pay them up front, or in many cases you can simply roll them into the new mortgage, obviously increasing the loan amount but keeping you from having any expenses to pay up front. Keep in mind though that if you choose to roll them into the loan, you will be paying interest on them as well as the loan amount. Clearly this should be carefully considered, and perhaps the only time to do this is if you simply don't have enough money on hand to pay upfront.

A manufactured home refinance, just like a traditional home, will also give you the option to purchase points. Doing so will lower the interest you will be paying. Points are simply fees paid to the lender up front. A point is just one percent of the amount of the loan. So for example if your loan is for $60,000, purchasing one point would cost you $600. Doing this will bring down the rate you pay (again ask your lender to find out how much), but be certain that you will own the property long enough to get back the amount you invested. If your plans call for moving in the next year or two, it's probably not worthwhile to purchase points as it will take longer than that to recoup what you spend.