A mobile home can be a great alternative to the much more expensive traditional home. With about 22 million people in the U.S. choosing the mobile home life, lenders realize the importance of working with mobile homeowners to ensure their lending needs are met. To borrow money against a mobile home, though, you’ll probably either need to own the land your mobile home resides on or go through the expensive process of converting your mobile home to a house attached to the property.
TL;DR (Too Long; Didn't Read)
You typically cannot get a home equity loan on a double-wide mobile home unless you own the land it resides on or you convert it to a home that is attached to the property beneath it.
Getting Mobile Home Equity Loans
Getting an initial mortgage on a mobile home comes with some challenges. In order to qualify for a mortgage, a home usually must be affixed to the property on which it resides. For this reason, some mobile homeowners have the type of loan that applies to personal property like an RV.
If you want to borrow money against a mobile home, the loan approval process will depend on the type of loan you have. Many mobile homeowners will hold a type of personal property loan called a chattel mortgage, in which the mobile home serves as collateral for the money they borrowed. Refinancing a personal property loan into a mortgage will make home equity loans an option, but it will require you to have your double-wide permanently affixed to your property.
Land and Mobile Home Ownership
One major issue that comes into play when you’re looking into mobile home equity loan options is whether you own the land your home resides on. If so, you probably have equity in the land, which means that you may be able to gather enough equity to qualify for a loan.
If, on the other hand, you rent space in a mobile home park, your home will be seen as a vehicle. The lender knows your home depreciates in value, so using it as equity is a risky maneuver. For this reason, getting a mobile home improvement loan will be easier if you purchase property to park your home on.
Converting Double-Wides to Houses
In order to qualify for a mobile home improvement loan refinance, you’ll need to first convert your double-wide to a permanent structure. This can cost more than $10,000, so it’s important to factor this into your decision to refinance. But after you refinance, your home will no longer be a depreciating asset, as it was when it had wheels, so the expense can become a valuable investment.
In addition to being able to qualify for a mobile home equity loan, converting your home to an attached structure can also help you save on taxes. It varies from state to state, but in states where mobile homes are taxed as personal property, having it classified as a manufactured home will likely have you paying real estate taxes instead. This is usually a lower rate than you’d pay in personal property taxes.
Cash-Out Refinancing on Mobile Homes
Cash-out refinancing is another option where it will always be tough to borrow money against mobile homes. With this type of lending, you’ll replace your older loan with a new one that reflects the change in its value during the time you’ve lived there. This gives you cash that you can use to pay off other debts or fund your children’s education.
This type of mobile home improvement loan is rare, as many lenders have policies that limit it. You may be able to get a small amount of cash back on a mobile home cash-out refinance, but typically this is only a couple thousand dollars. Often when mobile homeowners try to refinance, it’s to change the type of loan or the terms of the loan.
- LendingTree: Mobile & Manufactured Home Loan Guide
- LendingTree: Mobile Home Refinancing: Property Requirements
- Investopedia: Chattel Mortgage
- Ditech: Manufactured Home Loan Refinancing
- Bankrate: Refinancing Mobile Home Loan at Lower Rate
- Property Assessor of Davidson County: Mobile Homes
- Home.Loans: Home Equity Options for Mobile Home Owners
Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a ghostwriter for a credit card processing service and has ghostwritten about finance for numerous marketing firms and entrepreneurs. Her work has appeared on The Motley Fool, MoneyGeek, Ecommerce Insiders, GoBankingRates, and ThriveBy30.