Bad Credit Mobile Home Refinancing

Although once thought impossible to obtain, bad credit mobile home refinancing is available and can actually be a viable option for homeowners in the right circumstances. Mobile homes have changed a lot in the past decades. Referred to as manufactured homes after 1977, these portable houses were easier and quicker to set up than building a brick and mortar house. Today, most have a much higher standard of manufacturing. They still depreciate over time, but not as rapidly as their older counterparts. Most lending companies will not even extend refinancing for mobile homes prior to 1977. Even with the better quality, lenders are hesitant to provide bad credit mobile home refinancing.

Mobile home loans are generally difficult to obtain. Not only do lenders take a risk on individuals, but on a depreciating product as well. However, there are a few who do so. Borrowers must have great credit scores, several current accounts, four years of solid financial history and a 5% down payment. It is even more difficult for individuals who have struggled financially due to divorce, unemployment or bankruptcy. These borrowers often have difficult proving steady employment. Many are simply self-employed with incomes that vary from month to month. Since bad credit mobile home refinancing falls under a broader category of sub-prime loans, interest rates are usually higher because of extended risk. Such loans can be secured or unsecured. Because of the risk level, these loans are usually secured against the modular house, which is used as collateral.

Bad credit mobile home refinancing typically covers the home only, not the land, and are approved only if homes meet strict standards. HUD standards require them to be over 8 feet wide and at least 7000 square feet. Wheels and hitches must be removed and the unit secured to a permanent foundation. While some require residence in a community park, others aren't as stringent. No major repair work must be needed and an independent or appraisal or inspection approved is required. Interest rates depends on credit scores, employment history, amount of down payment provided and the state of residence. Terms can vary anywhere between 7 and 25 years, although a few might extend the term to 30 years. Setting up an automatic withdrawal from a checking or savings account is sometimes required for bad credit mobile home refinancing. Missing installments or paying less than what is owed can result in a large balloon payment at the end of the term.

Lenders typically use a rating system to calculate the amount of risk a borrower presents. Individuals with multiple delinquencies, history of poor repayment habits or even bankruptcy and repossession create a greater risk for the lender. The lower the score, the higher interest rates are applied. However, credit risk is often a matter of perspective. Borrowers seeking bad credit mobile home refinancing don't have to settle for one or two denials. Sometimes by simply shopping around, a homeowner can find the right lender. But in choosing, borrowers should be selective. With the special requirements of this type of financing, individuals must make sure to secure a knowledgeable lender with experience in the industry and who is independent of mobile home dealers.

Owners of manufactured homes refinance for many reasons. Since these loans often have no prepayment penalties or application fees, they are very appealing to individuals who need to refinance to save their home from foreclosure or consolidate outstanding debts. By consolidating, individuals have the convenience of one monthly payment. Homeowners who have been diligent on payments choose to refinance under better interest rates or terms, saving money to pay off debt or make home improvements. Bad credit mobile home refinancing also allows consumers to lock in on fixed rates as opposed to adjustable rates that fluctuate from month to month. Having a fixed rate enables them to budget better, knowing the exact payment amount each month.

However, refinancing isn't always the best option. If it doesn't save money, it is not worth the hassle. Before choosing bad credit mobile home refinancing, evaluate any account fees, closing costs, commission and other rates to see if the agreement will cost more in the long run. While refinancing can be used for home improvements, it is limited to what those improvements cover. For example, appliances and other major purchases may be covered but the loan will not cover items such as furniture. Also consider how to best leverage personal credit scores. As timely payments are made, scores will improve. Sometimes, waiting a little bit longer to rebuild a poor score, will make the homeowner eligible for a much better rate. God encourages us to wait for him to guide us. "But they that wait upon the LORD shall renew their strength; they shall mount up with wings as eagles; they shall run, and not be weary; and they shall walk, and not faint." (Isaiah 40:31)

Choosing whether or not to refinance is a difficult decision with many options and items to consider. While timing is important, a homeowner's personal situation can often dictate how quickly to seek for a loan. When faced with possible foreclosure, individuals feel pressure to act fast and often can get into an even worse situation. However, if carefully considered and approached with wisdom, homeowners can secure a refinance loan and gain the peace of mind they so desperately need to meet their other financial commitments and get a fresh start.