Are Manufactured Homes right for You?
Manufactured Homes are a popular and inexpensive housing option for many families. This article will explain important issues you need to know before you buy one. We will cover what manufactured homes are, where you can buy them, lending options, how they are set on your land, manufacture home codes and the investment benefits if any.
So what exactly are Manufactured Homes? Simple put they are homes that are built in rectangular sections on top of two I Beams in a factory. The I beams are assembled with wheels to form a trailer for transportation. At the front of the section a trailer hitch assemble is attached so the home can be towed. The sections are usually 80 to 95 percent complete. This means kitchens, bathrooms, siding, flooring, plumbing, heating and the other home components are finished. Once the home sections are complete they are transported to where they will be set as a complete home. Manufactured homes usually come in one to three sections and are usually limited to one story.
There are several manufacturers for manufactured homes. Some manufactures have several plants which serve areas as far away as 900 miles. Many manufactures have company owned dealers that sell only their homes. In addition there are independent dealers who commonly sale multiple lines. There is usually no advantage or disadvantage for buying from either type of dealer with the exception that multi-line dealers will probably have more home options.
The setting of homes is usually done with two general methods, either as real property or as titled property. This makes a big difference on financing options, how you will pay taxes on the property and lastly how the home looks and maintains its value.
Setting as real property requires a foundation where the home is permanently attached to the ground. This is also the most secure method. Homeowners can even take it one more step further and do a pit set. With this set the home sits on actual foundation walls that have been built in an excavated hole. Once the home is set and the excavated hole is back filled the manufactured home can almost look and feel like a site built home. When you install your home permanently on your land your home is taxed as real property.
The other setting method as titled property is much simpler. In fact it can be as fast and simple as cement blocks and jacks. As you can imagine this is much less secure. Since the home site in this case is usually not excavated the home will sit a few feet above ground. The requires several steps to get into the home. Also for appearance purposes many home owners install perimeter skirting. This type of foundation classifies your home as titled property and you will be taxed similarly as a car or boat.
There are two basic types of lending options available for the manufactured home purchases. They are “home only loans” commonly referred to as Chattel Mortgages and regular mortgages such as conventional, FHA and VA mortgages that encumber the home and land. In most cases the type of foundation your manufactured home sits on will determine which financing options will be available to you. Typically manufactured homes set as real property will have the best and lowest cost financing options.
Unlike stick built and modular homes manufactured homes comply with the HUD code. There are several important differences. In many ways the HUD code requirements are watered down in comparison to modular and stick built. Some of the notable differences are less insulation, lower roof snow loads and less electrical wiring. On the flip side the HUD code is more restrictive on fire damage prevention.
From an investment angle manufactured homes have traditionally depreciated in value. Typically their construction and material quality it lower than modular and stick built homes, but like stick built home if they are well maintained they can provide quality housing for many years.
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