Home and private land combined
Home only on private land
Home in a planned unit development
Home in a condominium park
Home in a rental lease park
The financing for all the above options begins almost the same. The majority of lenders use the following terminology and procedures.
Once the property is chosen, contact a lender of choice. All lenders will require a credit application to begin the process. The information included in this application will be borrower(s) name(s), current address, social security number(s), birth date(s), employment information, income information and banking relationships. From this basic information the lender will begin the approval process!
There are three major credit reporting agencies: Experian, Equifax and Transunion. From these credit reports, the lender will review current debt, current and past payment history, any derogatory credit history, etc.
Each credit-reporting agency has a credit scoring system e.g., "FICA Score." The scoring system is fairly complex but really looks at your payment history, credit balances basically within the last 24 months. The scores range from 450 to 800, the higher score being the better. Normally, the higher the score, the better rate and terms a buyer will receive, less risk for the lender. Over the last three years, almost all lenders have began using the credit scoring system.
Debt To Income Ratio
A normal debt to income ratio is 40%! This means that no more than 40% of a buyer’s gross monthly income can be used for all debt! If a buyers income is $3,000 a month gross, no more than $1,200 a month can be used for the manufactured home payment, space rent, and any other long term debt.
Proof of Income
There are very few stated income programs within the manufactured home financing industry. A lender requires the buyer to show proof of income. A salaried person must provide a recent pay stub within 30 days of funding and the last two year’s W-2 statements. A self-employed buyer must provide the last two year’s federal tax returns including all schedules. This income information will be reviewed by the lender and used to ascertain the buyer’s debt-to-income ratio.
Proof of Down Payment
The lender must ensure the buyer has not borrowed the down payment. The lender wants to ensure the buyer has an equity position in the home. Proof of down payment normally comes by providing statements of monies in a checking or savings account for 3+ months. Gifts from family members are normally accepted along with proof from the gift giver.
An escrow company is a neutral third party between buyer and seller. California State Law requires an escrow company be used on any non-cash transaction. The escrow company will control the titling, tax clearance, fund disbursements, etc.
Appraisal for a manufactured home today is very similar to any conventional home appraisal. The appraiser will use comparable sales within the last six months within the community. These comparable sales will be adjusted against the buyer’s subject property to determine fair market value. The lender as a base from which to determine the loan amount uses this value. Any buyer should know the exact appraised value on the property being purchased.
Funding and Closing an Escrow
Normal escrow is 30 to 45 days. During this time period, the lender completes the loan process, the appraiser completes his work and escrow receives clearances they require. This is a basic overview of the lending / funding process.