modular vs. manufactured

[Christy]

My husband and I are looking into buying a manufactured home. We already have land purchased so we just need a home to be put on it. After lots of research, looking, we found a dealer we were comfortable with. Then I started getting confused.

During the first visit she answered all questions and said that getting financed should be no problem. Then on the next visit she mentioned that we may have to get the home we want in a modular instead of manufactured. The price difference is almost 20 grand.

Why would that be? We live in Indiana. We have been approved for buying a stick built home so I don't understand why we wouldn't get approved to buy a manufactured home and be forced to buy a more expensive modular home. Has anyone ever run into this before?

[rmurray]

Yes folks run into this mortgage company quirk here all the time...For some reason the big mortgage investors have different qualifying rules for off frame modular homes and stick built than for manufactured homes..Sometimes this has to do with credit qualifying rules, income rules and often appraisal issues on the manufactured home..Our dealership has built 10 modulars in the last few months with this exact situation All would have been happy with the manufactured home at a lower price...

Did she explain that the interest rate will be lower on the mod...and in my area sales tax is thousands less...In our area when comparing mod and manufactured when FHA permanent foundation, sales taxes, future insurance (lower on the mod) and interest rates...the cost is nearly the same..

It is impossible for your dealer or I to explain the "logic" of the situation because there is none..Except the mortgage company has the money and if you want to borrow it you must go by their rules...

[Christy]

Thank you for your response. I really appreciate the help.
I had no idea that the interest rate and such could be lower with a mod.
I guess we just have to wait and weigh it when the time comes to buy.
Thanks again.

[E. J. Bermudez]

As a lender it is frustrating, but it is not the lender that make these rules. Mortgage lenders such as the one I work for have to conform to agency guidelines. Manufactured Homes are scrutinized more heavily because the performance of the notes. When a homeowner gets foreclosed on a manufactured home the losses are typically much larger than that of a site built home. Higher foreclosure rates on manufactured homes is the culprit. There is a large supply of pre-owned and foreclosed homes on the market which contribute to even more losses.

Because of the losses, agencies such as Fannie Mae & Freddie Mac have placed in rules that make the financing of manufactured homes more restrictive than site built homes.

Modular homes are built with better quality and as such have been viewed more or less on par with site built homes and are generally treated as site built homes when it comes to financing. There are many more loan programs available for modular homes than there are with manufactured homes.

I hope this helps explain what you are hearing.