Home equity loan problems if you own a manufactured home

Banks are skittish about lending to owners of homes that aren’t “stick built”

The lending industry has enjoyed a huge run of business during the last five years. Interest rates have been at unusually low levels, and home sales have been brisk, even has housing prices have risen to the highest levels ever seen.

In addition to primary mortgages, lenders have been just as busy refinancing existing homes and handing out home equity loans to just about anyone who qualifies. It’s been a good time to be a lender with money to lend and a good time to be a homeowner looking for money to borrow.

For almost everyone, that is. Lenders have been willing to provide home equity loans to qualifying lenders, providing that their homes appraise for more than the amount owed on the mortgage. There is one glaring exception to this rule, however, and it hasn’t been well publicized - It is almost impossible to obtain mortgage refinancing or a home equity loan for a manufactured home.

The term “manufactured home” has various meanings in the housing industry, but it has pretty much a single meaning among members of the public, and that meaning is “mobile home.” Most people associate the term “manufactured home” to mean a metal home on wheels. Apparently, to many lenders, it means just that.

In the building industry, a “manufactured” home is simply one that isn’t built from scratch, or “stick built” on site. That doesn’t mean that it isn’t built using wood and sheet rock, as a traditional home would be. It usually just means that portions of the home are preassembled elsewhere and trucked to location for final assembly. Most such homes are built on concrete foundations, just like any other, and are built to last for decades. Many of them are virtually indistinguishable from stick built homes, and neighbors are often none the wiser.

But the origin of the home will come out during an appraisal, and lenders are quite loath to lend money on manufactured homes, no matter how nice they may look or how well they may integrate into the surrounding environment. Most lenders who refuse such loans don’t offer much in the way of reason; they simply say, “We do not lend on manufactured homes.” That’s not much help if you happen to own one.

Anyone who is considering purchasing a manufactured home may wish to take this into consideration before buying. It may not be possible to obtain a home equity loan or refinancing later, should it become necessary. If you are unfortunate enough to find yourself in situation already, you may simply have to be patient. While many national lenders are reluctant to lend money on manufactured homes, some small or local lenders may be willing to do so. It will just take some more patience and time to find them.