Manufactured homes have gained popularity since 2008 and are a common housing option for seniors. However, there seems to be a lot of confusion about whether these types of properties qualify for reverse mortgage help. So they? Or does it demand the characteristics of your specific home?
The rebound
These types of houses have experienced a massive resurgence in popularity in the last eight years.
The ability of Warren Buffett and Berkshire Hathaway to survive and thrive during the 2008 crash is largely attributed to the prefab company Clayton Homes. Billionaire real estate investor Sam Zell continued to expand his portfolio of manufactured home communities through Equity Lifestyle Properties, even as he shed billions of dollars worth of apartments from late 2015 to early 2016. Some Wall St. traders even they have quit their jobs to invest in mobile devices and manufactured home parks.
Additionally, we’ve seen an explosion of providers offering everything from tiny houses, 100% green and sustainable houses, and improved manf. golf homes and resort communities in popular retirement and vacation areas.
So it seems that more people are choosing manufactured homes again, and many have paid cash for them due to a shortage of loans. The big question is; Can they take advantage of reverse mortgages on these properties when they really need them later in life?
How to Get a Reverse Mortgage on a Manufactured Home
Yes, manufactured home owners can enjoy the benefits of reverse mortgages and lines of credit. But there are restrictions.
The US Department of Housing and Urban Development (HUD) states that manufactured homes are eligible for reverse mortgages and home equity conversion mortgages. However, HUD also states that these loans are subject to FHA lending guidelines.
These guidelines change over time, but at a minimum, households should:
Be built after June 15, 1976
Be at least 400 square feet
Be attached to a permanent base or chassis
Be built in accordance with federal building and safety standards
It will be placed in its original location brand new from the manufacturer
Be located on a property you own
5 peculiarities to take into account
1. FHA guidelines can change
2. If the property is in a community, the community may also have to be approved
3. Current floodplain requirements could be affected as the government expands standards to account for 500-year floods (up from the previous 100 years)
4. Individual lenders can add their own demands in addition to HUD and FHA rules
5. HUD requires a foundation inspection to ensure the foundation meets FHA guidelines
Homeowners should also be aware that many lenders and brokers will simply dismiss manufactured home loan inquiries instantly. Why? Because many are simply not used to making these loans and do not want to bother to learn. Others don’t want to deal with the smaller loan amounts normally associated with this type of property, compared to say, luxury beach condos or jumbo loans for large homes. They just aren’t that profitable.
Summary
The best technological and construction practices, as well as the current economy, make manufactured homes very attractive and profitable as a home or investment today. It is possible to obtain a reverse mortgage on this type of property. Just make sure you know which ones may or may not qualify, and try to stay ahead of changing rules if you’re buying a manufactured home now. If lenders aren’t helpful at first, keep looking, there are reverse mortgage specialists who love to make these loans and are very efficient at doing so.
