Do you have some financial challenges but don’t know where to get some funds? Well, if you own a mobile home, you can take a home equity loan to fix them. Here are some of the mobile home equity loan options available that you can consider today.
Are you considering taking a mobile home equity loan? If you have a pressing financial need, you can take a mobile home equity loan to fix some of those financial issues and repay it later in installments.
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However, when you want to cash out of mobile home equity loans, you’ll need to consider several things. You will need to check out the requirements, the suitable lenders and the pros and cons of the loan options available to you.
Many people wonder, can you take a home equity loan on a manufactured home? Your best option is to take a quiz to determine eligibility.
Well, in this piece, we will try to answer that, as well as explore some of the features, requirements, and pros and cons of the mobile home equity loan.
Table of Contents
What is a Mobile Home Equity Loan?
A mobile home equity loan is a kind of a mortgage whereby the borrower uses the equity in the mobile home as their loan collateral. The mobile home collateral loan comes in handy when the borrower wants to finance some major home repairs, want to clear a student loan debt or pay some pending medical bills.
This mobile home collateral loan reduces the actual equity of the home, and therefore it creates a lien against the borrowers’ home.
Equity means the difference between the market price of a mobile home and the amount left on the mortgage taken.
Home equity loans operate almost like an auto loan or a mortgage. The borrower gets the loan as a lump sum amount and repays it back to the lender over a fixed period and interest rates.
The average interest rate today is 6%, and the period can range between 5 and 15 years, and the lender makes sure that the 80% loan-to-value ratio is not surpassed. Most borrowers wonder if there is a minimum loan amount that you can get.
Generally, most home equity loan lenders have a minimum of $10,000 though some may not go below $25,000.
There are numerous home equity lenders today. To choose the one with the best offer, you must do your homework well because the criteria vary with different lenders.
Let’s first find out what a home equity lender means.
Definition of a Home Equity Lender
A home equity lender is a financial entity that offers either home equity lines of credit or home equity loans to their customers. These entities could include banks, savings and Loans, Credit Unions, Private Mortgage Lenders or the Veterans administrations and more.
When shopping for a suitable lender, make sure that you check whether the lender is genuine and not just another scammer. If the lender gives a highly-pitched sales proposal or can’t put everything in writing, avoid them.
They could be skimmers or con artists trying to rip you off your home.
If you want to consider a HELOC, take this 5 minute quiz to figure out whether a HELOC is right for you or not.
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Home Equity Loan Pros and Cons
You may want to consider the pros and cons of the mobile home equity loans before you decide to take out the loan.
Advantages of a Home Equity Loan
Mobile home equity loans have numerous benefits. They include:
- Lower Interest Rates: When acquiring a mobile home equity loan, you won’t incur much interest as an unsecured loan since your home will be serving as the collateral.
- Access to a lot of Funds: You can get more funds to meet your financial issues by taking out a mobile home equity loan than a credit card or a personal loan.
- Tax Benefits: You can deduct the interest rate when itemizing your taxes if you use the loan to renovate your home
- Flexibility: You can use the loan for any purpose, including home repairs, going on a vacation or any other.
Disadvantages of a Home Equity Loan
- Risk: The loan incurs a higher risk because if you are unable to repay the loan, your lender may foreclose it.
- Going “Upside Down” or “Underwater” on your mortgage: This is a scenario that occurs when you take out a home equity loan but the value of your home decline. It means that you’ll owe more on your home than its actual price.
- Closing Costs and Fees: The home equity loan becomes like a second mortgage, and therefore the closing costs, which range between 2% and 5%, can be costly. It means that if you pay off the loan before its due or ahead of schedule, you may incur an early termination fee.
- The stress of taking on a Debt: The mobile home equity loan is still a debt even though it has favorable interest rates than most debts.
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Mobile Home Equity Loan Qualification Criteria
For you to be eligible for a mobile home equity loan, you need to adhere to certain conditions. They include:
- Have an excellent credit score
- Own the mobile home and have a loan on it.
- Must be over 18 years of age.
- Have a methodical, recurring, and provable income source
- Has an ability to repay, for example, proof of income with pay stubs, investments and tax returns etc.
Home Equity Loan With Low Income
If you don’t have any income source or your income is low, you may not get loan approval for a mobile home equity loan. You can consider getting a consigner to help you get the loan approval.
A cosigner may be a person with an excellent credit score and high income. The person must agree to pay off your debt if you default on your loan. If you have good credit and a more substantial amount of equity in your home, the better your chances.
If you get approved with low income but fail to make payments, the lender may end up foreclosing your home. So, it’s crucial to plan how you’ll repay the loan after you spend it.
Documents Needed When Applying For a Mobile Home Equity Loan
To get a mobile home equity loan approval, you’ll need to provide several documents. They include:
- Property information like property type, purchase price, address, purchase date
- The estimated value of the property
- Personal information including date of birth, Social Security number, employment status, marital status, residential status.
- Income information
- Information of other debts you may have such as student loans, auto loans, current mortgage, home equity accounts and credit cards
- The most recent copy of paystubs that shows the past month and the date of your earnings
- An Internal Revenue Service (IRS) Form 4506T that is complete and signed
- A copy W_2 forms for the most recent two years from your employer
- Proof of hazard, homeowners and flood insurance
- The most recent two years documents of personal Internal Revenue Service (IRS) tax return and all schedules if you’re a self-employed borrower.
- The most recent two years K1’s from LLC, partnership, or S Corporation.
See Related: How to Get a HELOC on a Rental Property
Bad Credit Home Equity Loans
Are you wondering if you can get a mobile home equity loan if you have a bad credit score? Well. Most lenders look for good to excellent credit when considering a home equity loan.
However, in some instances, you can get approval with a credit score of 620 with most lenders, but most don’t take a score below 670.
If your credit score is poor, you may consider finding ways to boost it. For example, you can open a secured credit card, get on a schedule to avoid late repayments or clear up your credit history.
The conditions vary with different home equity loan lenders. For example, some give to borrowers that have a lot of equity and a low debt-to-income ratio
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Without any further ado, let’s explore five mobile home equity loan options.
Top 5 Mobile Home Equity Loan Lenders
US Bank offers home equity loans in addition to the other traditional bank products and credit cards. The bank terms are reasonable. For example, a borrower can get a 15-year loan with an APR of 5.74%., a 10-year home equity loan with an APR of 5.49%, or a business loan of 30 years with competitive rates.
With US Bank, the maximum loan amounts can go up to $750,000.
You can make an online application which makes the application process faster. US Bank customer service is also excellent.
When applying on the mobile platform, you can chat with the customer support on their mobile platform.
The borrower is not obligated to pay any application fees, annual charges, or closing costs. They only incur an optional origination fee.
If you set up an automatic monthly payment plan, you can get a 0.25% rate discount in addition to a 0.375% for the ones who are in a reward program that they prefer.
If you’re looking for a reliable fixed-rate loan, then you should consider checking out Figure. Figure is a direct-lending company with the best HELOC rates. The company offers mobile home equity loans exclusively.
Their loans can range from $10,000 to $150,000. The loan term can range from 5 to 15 years with no prepayment fees.
To approve for the loan, it has to have a loan-to-value ratio of 80% or less. The financial institution offers mobile home equity loans that you can put to any use, including doing a large purchase or home renovations.
The borrower does not incur the user fees but pays a 3% origination fee. The borrower should have at least a minimum credit score of 680. The company only does a soft credit pull which means that the search won’t affect your credit score.
Figure offers excellent customer support services during the business hours. They have a very simple underwriting process, and the application is easy.
PenFed Credit Union
Another excellent company that offers home equity loans is the PenFed Credit Union. The maximum loan amount is $400,000, and the loan term can go up to 20 years.
The loan-to-value ratio in PenFed is 90%, but it can also be 80% for clients with the best deals. PenFed interest rates can go as low as 5.34% for some loans.
The borrower can use the online portal to apply for the loan. The borrower may be required to cater for the closing costs if they qualify for the closing cost credit.
Another option is CitiMortgage Financial. When using this option, the borrowers can visit the company in person, call or use their online portal. The borrower gets a chance to get a loan officer who offers a free consultation and may get preapproved if they use this option.
In CitiMortgage Financial, the minimum loan amount is $10,000, and the maximum is $8million. The maximum debt to income ratio is 43%. You can access a wide range of products matching different ranges of credit scores.
The borrower incurs a $100 application fee in addition to the origination fee which varies depending on the type of loan and the location of the borrower.
They have a HomeRun loan program that lets the borrowers start with even 3% down. If you have a Citibank demand deposit account, you can also qualify for discounts on rates and closing costs.
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Navy Federal Credit Union
If you serve in the U.S. military or have family members who do, then you can qualify for the loan in the Navy Federal Credit Union. This financial institution offers a variety of loan products, including FHA and VA loans.
Also, it employs a different kind of underwriting that includes items such as utility, rent, and the mobile phone bills. It offers loan products that minimize the closing costs amounts.
You can get a loan of up to 100% of the borrower’s home value with loan amounts that can range from $10,000 to $500,000.
You don’t pay any origination or application fees.
Their loan terms usually range between 5 and 20 years. The only downside is that you must qualify as a customer to get a loan from this facility.
Conclusion On Mobile Home Equity Loan
When shopping for a mobile home equity loan, make sure that you’re aware of what you’re getting yourself into. You may want to consider other options such as zero-interest credit card or personal loans because they don’t involve placing your home at risk.
When you are approved for the loan, be prudent when using the funds you receive as a loan.
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