Manufactured Home Lending Programs

There are 3 main types of lending options available when considering

manufactured/modular construction, Chattel, Construction and End (Permanent)

Mortgages. Each has its own specific purpose and characteristics. Below is a review of

these programs and the specifics of each.

1. Chattel Mortgage

A Chattel Mortgage is a loan that can be obtained from a bank or financial institution

using some sort of movable personal property (other than land and buildings) as

security – so a Chattel mortgage is used for financing a car, RV, boat etc on its own

without any land. It is also the mortgage that is used for financing a Manufactured

home on its own without using the land as collateral for the loan. Perfect for a home

going into a Mobile home park or on someone else’s land where there will be no

mortgage on the land just the home itself.

2. Construction Mortgage

A Construction Mortgage is a loan that allows for funds to be drawn in phases to

complete construction objectives, such as foundation, home purchase, home setup, etc.

There are two main types of construction mortgages:

(a) Stand-alone construction plus permanent mortgage: There are two loans

with this traditional construction loan. The first loan pays for construction as the

home is being built. When you move in, you get another mortgage to pay off the

construction loan. It’s two separate loans and is the kind of construction

mortgage that home builders use when the building process takes a long time.

The second mortgage will close at whatever the interest rate is at the completion

of the construction process. Each loan has its own closing costs and interest

rate.

(b) Construction-to- permanent: You close only one loan up front for the total

estimated costs of construction plus the home. This is the loan we typically use

for the shorter time frame for the construction of a factory-built home. The lender

pays the contractors for the construction costs as they do the work and pays the

dealer for the home when it comes off line. When you move in the loan balance

(the total amount paid) becomes your permanent mortgage without the need to

close another loan.

3. End (Permanent) Mortgage Loan

An End loan (Permanent) Mortgage is a loan that will pay for a completed real estate

project (or for the purchase of any existing home for that matter). Permanent financing

is obtained after completion of construction, there are no draws during construction as

with a construction loan.