Do Mortgage Rates Affect The Cost Of A Mobile Home?

Anywhere one turns right now we are reminded of what is going on with the real estate market.

Recession is ongoing and the price of everything continues to increase. The housing market is not an exception. If you are looking to buy a mobile home in the Sarasota Florida area and have a limited budget, make sure to do research on the prices of mobile homes especially when you are planning to finance your mobile home through housing loans. Having said that, it is always better to have cash as many lenders will not finance a mobile home on a rented lot.

Rising mortgage rates, near-record rental prices, and total scarcity of inventory both in the buying and rental market make it a very unusual and turbulent time to be in the housing market.

All of this, further shows that mobile home ownership continues to be the beacon of affordable housing.

Much of the spotlight has been turning to rising interest rates and how, the higher they go, the more the home costs.

The reason for this is that when someone looks to buy a property and obtain a mortgage for said property the mortgage is subject to an interest rate on the amount of money that is being borrowed.

Essentially, an interest rate is the amount of money it costs to borrow money from the lender.

The higher the interest rate the more expensive the money that the borrower is borrowing thus costing the Buyer more money per month to own the home they are buying.

With this understood, does this translate to more expensive mobile homes?

The answer, like so much in the industry, is a yes AND no.

Let us explain.

Most traditional lenders will not lend on a mobile home if the land itself is not included in the sale.

The reason for this is that many traditional lenders feel that if the home is indeed “mobile” and the borrower does not pay the loan that they agreed to pay they could just as easily move the home to another location without the lender ever knowing where they went. This would then create a situation where the lender would not be paid the remaining amount owed on the loan.

Although this is highly unlikely for several reasons, this is what most major lenders tend to believe and the current situation.

There are other, third-party, lenders that will lend on mobile homes on leased land.

These lenders will usually use the base mortgage rate for single-family homes as their starting point for a mortgage rate then add a few additional percentage points on top of that.

At the time of this writing, most mobile home lending agencies will usually add an extra 1-2% on top of the traditional mortgage loans to fund the mortgage on a mobile home.

As an example, if the standard single-family mortgage loan is 5% then it would be reasonable to think that a third-party mobile home lending agency would charge anywhere between 6%-7% for a loan on a mobile home that does not include the land the home sits on with the sale of the property.

So, in this situation, yes, the loan on the mobile home could cost the Buyer more as the mortgage rates for single-family homes increase.

A very common way to purchase mobile homes that do not include the land is by paying with cash.

This is not subjected to any mortgage loan rates simply because the Buyer is not paying with a loan and has no need to get prequalified by a mortgage company for the payment of their new home.

In this situation, the Buyer has no need to be concerned with what the current mortgage rates are as they are not affected by them in the least.

Due to the affordability of mobile homes, the majority of mobile homeowners are actually not paying mortgages. Not only is it difficult to finance a mobile home on leased land through traditional loans but most mobile home Buyers buy their homes with cash. 

The average cost of a new single-family mobile home in Florida is $81,000 while a traditional house is $400,000. Although not many people have $81,000 cash, many people who move to mobile homes make their plan a couple of years before buying, thus, they are able to save money. 

Buying a house regardless of whether it is a traditional site-fixed or mobile home is not something one can decide without advanced planning. 

If you are buying a mobile home, especially in the Sarasota Florida area, observe the market, don’t rush, and know your financial capability

Regardless of if you are looking at buying your new mobile home with cash or by obtaining a mortgage, it is of utmost importance to be aware of what is going on with single-family home space as these have a direct correlation to not only the cost of the mobile home but the cost of obtaining a mortgage should you need one.

Using this information will allow you as the Buyer to create an accurate budget for your next mobile home purchase.

The Mobile Home Dealer are licensed mobile home broker in Sarasota Florida and the surrounding areas. We provide professional buy and/or sell assistance to our clients. If you have any questions, please contact us by clicking this link. You may also visit our Facebook Page and send us a message.

This is Mark Kaiser with The Mobile Home Dealer and we help mobile home Buyers and Sellers get to a better place in life.

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