Buying a Factory Built Home

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Before You Buy a Manufactured Home

By: Janet Wickell

Manufactured homes, formerly called mobile homes, are built on a non-removable steel chassis and transported to the building site on their own wheels. Some manufactured homes look like the houses you see in a traditional neighborhood--they don't all resemble a traditional single or doublewide "trailer." There are important considerations you should make before you decide to buy a manufactured home.

Can You Put it on the Land?

Some communities and developments do not allow manufactured housing. Research local zoning ordinances, deed restrictions, restrictive covenants, and other similar documents before you buy land for a manufactured home.

We're Looking for Growing Equity

One reason most of us want to own a home instead of rent one is for its investment potential. And since we often don't live in the same house for enough years to pay down the balance very far, we depend on the rising cost of real estate to increase our equity, the portion of the home's value that we get back to buy another home when we sell.

You Might not Get it with a Manufactured Home

In general, manufactured homes decrease in value. That's not true for every type of manufactured home or in every instance, but it is true overall. Even your land could decrease in value if it is surrounded by other manufactured homes that are decreasing in value. Do your homework! Learn as much as you can about the resale value of manufactured homes in the area before you buy. A real estate agent can help you find that information.

Land-Home Packages

We see many people who opt into land-home packages, installment financing options that are are set up by the retailers who sell manufactured homes. The packages include the house, the land, and all work needed to get the home ready for occupancy.

But Hold on Before You Sign

Land-home packages are fairly easy to get approved for, even if you have credit blemishes, but the interest rates can be high. Many people are making higher payments for a manufactured home than they would have made for a traditional or modular home--and those structures are nearly always a better investment. Explore your choices before you assume that you cannot buy a traditional home. You might be surprised at the financing options that are available.

Is it on a Permanent Foundation?

Some lenders will not finance a manufactured home if it is not on a permanent foundation. The dealer will get if financed for you either way, but if you are putting the home on land you own, make sure it's on a permanent foundation. Why should you care? Because if it isn't, and you decide to sell, it will turn off some buyers and limit the number of lenders they can choose from. That means the home will be on the market longer.

Other Considerations

There are other questions you should ask before you buy a manufactured home. Is it built to handle the climate at its destination? What type of warranty does the manufacturer provide? Does the dealer help resolve warranty problems? How long has the manufacturer been building homes? What can they tell you about the home's structural components? Ask as many questions as possible to help you feel comfortable with the purchase and the manufacturer before you say yes to the sale.