As the cost of housing continues to rise, more and more people are considering the affordability and convenience of manufactured homes. Still, a manufactured home in Florida costs an average of $65-100 per square foot to construct. This is not a small expense, and not many will have enough cash in the bank to pay for their home outright. Given the required outlay for outright home ownership, deciding on financing options can be overwhelming. But we're here to help you through the process.
Chattel home loans are different from traditional mortgages or standard home loans in that they're specifically for manufactured homes. And if you're purchasing a manufactured home here in Florida, then a chattel home loan with Cascade Financial Services will help you in that quest. There's a home loan option available for nearly everyone, so you just need to understand what's best for your unique situation. Although purchasing a new home can seem overwhelming, we are here to guide you through the process.
What Is a Chattel Home Loan?
A chattel loan (pronounced like "cattle" but with a "ch"), or chattel mortgage, is a loan used to purchase movable personal property. If you want to buy a manufactured home, which is not permanently attached to the land you live on, you could consider a chattel loan. The movable property is the collateral on the loan, just as fixed property is in a traditional mortgage, and you pay the lender back over time. Chattel loans may also be referred to as security agreements, a lien on personal property, or movable hypothecation.
Once payment on your chattel home loan is completed in full, full ownership of the property is transferred to you. Chattel loans can also be taken out for other signs, movable purchases, such as vehicles, airplanes, boats, or farm equipment. According to the Consumer Financial Protection Bureau, however, approximately 42% of all current chattel loans have been used to purchase manufactured homes. Further, chattel loans offer competitive rates and flexibility to meet your specific needs. What's more, they often feature flexible credit score requirements and low down payments, which makes them quite attractive to buyers.
Other types of loans you may come across include VA loans (which would apply to the military community), FHA loans, personal loans, or traditional mortgages. It's important to understand which option is best for your situation, and which options apply to you, if you're purchasing a manufactured home.
How Does a Chattel Home Loan Differ from a Traditional Home Loan?
Chattel loans are specific to personal movable property, while traditional home loans are designed for fixed, permanent homes. The former involves a smaller loan amount and shorter terms than standard mortgages. The timeline of securing a chattel loan is also often much quicker than getting a normal mortgage, so you can move into your new home faster with this type of financing.
Sometimes chattel loans do come at higher interest rates than other mortgages, because in the event of foreclosure, the bank would own the home but not the property. This limitation means there is a greater risk for the chattel lender than in a traditional loan situation. That said, if you're interested in purchasing a manufactured home but don't own the property where the home will be placed, then your best option is most likely a chattel loan.
What Is a Manufactured Home?
Prior to June 15, 1976, factory-built homes were called mobile homes, but new safety standards were introduced on this date. And now these types of homes are called manufactured homes. However, as matter of habit, many people still use the terms interchangeably. A key feature of manufactured homes is that they're movable, and the owner of the home may not — typically doesn't — own the land the house is on. Instead, they own the building itself and lease space on the land.
Additionally, if a manufactured home is built to HUD code, then there will be two forms of verification: a certification label and a data plate. The data plate is found inside the house, usually highly visible and near the electrical box, while the certification label is on the end of each transportable section of the home. These items are very important for appraising the home and ensuring it remains compliant with HUD code. When you're looking to purchase a manufactured home, your lender will assist with identifying these forms of verification to give you the correct appraisal.
Who Should Get a Chattel Home Loan?
If you're considering renting a lot on a manufactured home community and want to purchase a manufactured home, then a chattel loan may be ideal for you. The timeline and flexibility may also be attractive if you're looking to move in sooner than later. Nonetheless, only you can decide what kind of loan is really the right one for you, but hopefully this information has helped guide you in the right direction.
As a future homeowner, you'll have your own expectations and needs when taking out a loan. The process can seem overwhelming, but we at Cascade Financial Services are here to make it as straightforward as possible. Our staff can provide you with even more information than outlined here.
If you're looking to purchase or refinance a manufactured home, then a chattel home loan is an excellent option. But should you not own the land you live on, this may actually be your only option if you're looking for financial assistance in making your home purchase. Chattel loans are the simplest and most timely option for home financing as well, which makes them especially attractive.
On that note, we believe there's something for nearly everyone when it comes to home purchase, so be sure to reach out to us for info on your options and how best to proceed. We look forward to hearing from you! You can reach us at 855-516-2830 or via our secure online messaging service.