For many people considering a home purchase—particularly first-time home buyers—the current real estate prices are too much to swallow. Some have even begun researching alternatives to traditional homes.
A quick Google search may result in finding things like trailers, mobile homes, and modular homes—all considered types of manufactured homes. All this information can be overwhelming and downright confusing.
If you're ready to buy a house but aren't sure if a manufactured home is right for your needs, we've got you covered. We'll even dive into how to go about selecting a home and a site, as well as what financing to use.
Manufactured vs. Mobile. vs. Modular
Often the terms “manufactured,” “mobile home,” and “trailer” are used interchangeably, but in fact, they are not exactly the same thing.
In 1976, the US Department of Housing and Urban Development (HUD) established a specific code for homes that are called “manufactured homes." This set of standards work to improve not just the design and durability of manufactured homes but also the safety of the homes.
Although you may still see manufactured homes referred to as “mobile homes” or “trailers,” know that if the government considers it “manufactured” and it was produced in the last 40 years, it will need to adhere to all the standards set by HUD. Any home generally referred to as a “mobile home” was likely built prior to 1976.
Further confusing things are the terms “modular” and “prefabricated” homes. These are similar to “manufactured” homes in that people build them off-site and deliver them to their final destination. The two primary differences, however, are the number of stories the homes have and how they transport them.
True manufactured homes are typically only one story high, although they can be single wide or double wide (providing more space for larger families). They build these homes with wheels, which allow the owners to tow them rather than carry them to the location.
Modular homes, on the other hand, get built in sections, often with multiple stories. They also build them without wheels, meaning homeowners must carry them to their destination on a large flatbed truck.
Benefits of Buying a Manufactured Home
In addition to the potential cost savings of a manufactured home, there are numerous other benefits.
For one, like buying a traditional house, you get to choose between buying a new or used home. And there are often as many choices as traditional homes to choose from.
The upkeep of a manufactured home also tends to be less costly and in general, they are easier to maintain.
We couldn’t mention the benefits without adding one drawback…the resale value of manufactured homes tends to be low. If your manufactured home is for your long-term residence, investment, or retirement home, that shouldn’t be much of a concern. If, however, you are planning on selling it in the near future, you may want to look into other types of housing.
Manufactured Home Costs
The cost of the home is only the first thing in a long line of things that you must consider.
A new manufactured home ranges in price from $15,000 to over $100,000; obviously, a used home is slightly less expensive. The actual cost depends on the size of the home, finishes such as granite counters and hardwood floors, as well as exterior additions like fancy doors, patios, and decks.
Purchase and Delivery
There are other costs that go with the purchase and delivery of a manufactured home. First and foremost, you need somewhere to put the manufactured home. You’ll need to figure the cost of land (leased or purchased) into the equation. A home park often leases the land. This is an area specifically zoned and designated for manufactured homes.
Home parks often have a very vibrant and close-knit community. This option also requires less up-front money but may make getting a traditional mortgage more difficult. Additionally, you would still have a monthly land lease payment on top of your mortgage.
Buying the Land
Buying land up front may cost more, but you would have the security of knowing that you own the land where your home sits. It will also likely be easier to get a mortgage to finance your manufactured home. This option is more complex and includes extensive site preparation.
You will either need to understand local zoning laws as well as deed restrictions or hire someone like a real estate attorney who can help you navigate these things. Aside from the legality of the land, you will need to ensure that the actual soil is appropriate for placing a manufactured home. Determining this includes testing for soil pollutants as well as stability. You’ll also want to check for buried utility lines as well as gas and oil pipelines.
In addition to the building and the land, make sure you consider the cost of transporting the home to the land, pouring the foundation, constructing the underpinning, and connecting the utilities. All of these add up, so make sure you have enough in your budget for them.
Finding a Quality Manufactured Home
As with any major purchase, you'll want to thoroughly evaluate the seller as well as the home to determine if it is a sound investment. If you're buying new, you will want to contact at least a few manufacturers and talk with them to discuss customization options and pricing. You can also find reviews online just as you do for restaurants and hair salons.
If you are buying a used home, be sure to contact reputable local brokers or resellers. They will have the most inventory and likely have qualified the homes they sell to ensure quality.
Like any home purchase, you should also get a home inspection. Although the builders have their own inspector, it's easy to miss things when you've got a lot to inspect. Hiring your own inspector helps you catch things that need repairs before you move in.
What to Look for in a Manufactured Home
You probably have ideas about what kind of floor plan you want, how many bedrooms and bathrooms you need, and whether you want one-story or two. These aren’t the only things you should consider.
Here's a list of things you should look at when shopping:
- Window and door quality and insulation
- Floor material and structure
- Exterior siding
- Roof material and quality
- The anchoring system for the home
Financing a Manufactured Home
Mortgages aren’t just for traditional homes. Although the interest rates for manufactured home loans will likely be slightly higher, they are definitely an option, which may help you breathe a sigh of relief. Financial institutions are continuing to evaluate their manufactured home loan options as these homes become safer and longer-lasting.
There are four primary financing options when purchasing a manufactured home. They are Conventional loan, Federal Housing Administration (FHA) Mortgage, Veteran Affairs Mortgage, and Chattel loan. However, each of these options has requirements and limitations and you should evaluate them carefully.
Talk to your mortgage lender if you have any questions about buying a manufactured home.