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Is seller financing a viable way to buy a mobile home in Sarasota or should one look to seek financing from their local bank or credit union?

Most mobile homes that we sell here at The Mobile Home Dealer are sold for cash, without financing, directly from the Seller of the home to the new Buyer.

We fully realize this is not possible for everyone to buy in cash as this can get expensive fast. The question then begs to be asked, can mobile homes on leased land be loaned through traditional financing measures?

As discussed in the past, mobile homes that are physically located on leased land, are classified in the State of Florida as personal property which is the same way a car is sold.

Traditional loans that can usually be used for financing a vehicle are not available for mobile home purchases. Traditional mortgages that can be used for stick and brick homes are not available to be obtained for mobile homes either on leased land because, again, mobile homes on leased land are viewed as personal property.

So then where does one come up with financing for a mobile home on leased land if they need it?

This is where seller financing comes into play for those needing a financing option on mobile homes that are on leased land.

Seller financing is a financing option where the Buyer pays a Seller directly a down payment for the home and then negotiates a monthly payment to be made each month that will count towards the remaining balance of the home loan. In this arrangement, it is up to the Buyer and the Seller on whether or not interest will be charged on the loan that is being serviced by the seller themselves.

When seller financing occurs, the Seller will be put on the title as a lien holder and the Buyer will have the Seller’s name on the title until the note is paid in full and the seller reports this to the Department of Motor Vehicles.

Once the loan has been satisfied and the Department of Motor Vehicles has been notified, the Buyer will then need to go down to the DMV to apply for a new title with their name as the sole owner of the property. This will remove the Seller from the title as a lien holder.

Having said that, although seller financing may sound like a good option for buyers who don’t have any choices, there are also pros and cons one must know before finalizing the deal.

Two River-Bradenton Florida - seller financing

Two River-Bradenton Florida

Disclaimer: The Mobile Home Dealer is not a financial institution or authorized to give any legal financial advice. This information is purely based on our experience and may be useful for people who are buying and selling mobile homes.

Seller or owner financing can be a good option for buyers who don’t qualify or can’t find the right mobile home mortgage. For sellers, owner financing provides a faster way to close the sale because the buyer can skip the lengthy mortgage process. Another advantage for the seller is that they may be able to sell the home as-is without spending on maintenance which allows them to pocket more money from the sale.

The pros and cons of seller financing that both the seller and the buyer need to understand:

Pros for Buyers

Faster closing. No processing and waiting for the bank’s loan officer.
Flexible downpayment. No government or bank-required minimums.
Alternative for buyers who can’t get bank financing. A better option for buyers who can’t secure a mortgage.

Cons for Buyers

Higher interest than the bank. Depending on how you negotiate with the seller, the interest can be higher than the bank.
Due-on-sale clause. If the mobile home is mortgaged, the bank of the lender can demand immediate payment from the owner/seller. To avoid this problem, make sure that the mobile home is not a mortgage and that the seller doesn’t owe anything from the lender involving the mobile home. Also, make sure that the mobile home is not used as collateral.
Balloon payments: With many owner-financing arrangements, a large balloon payment becomes due after five or 10 years. If you can’t secure financing by then, you could lose all the money you’ve paid so far—plus the house.

Pros for the Sellers

Can sell “as-is”. The seller can sell the mobile home right away without spending on repairs.
Good investment. Potential to earn better rates than investing your money somewhere else.
Lump-sum option: The promissory note can be sold to an investor, providing a lump-sum payment right away.
Retain title: If the buyer defaults, then you keep the down payment, any money that was paid—and the house.
Sell faster: Potential to sell and close faster since buyers avoid the mortgage process.

Cons for the Seller

Dodd-Frank Act: Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, new rules were applied to owner financing. Balloon payments may not be an option, and you might need to involve a mortgage loan originator, depending on the number of properties that the seller finances under owner-financing deals each year.
Buyer Default: The buyer could stop making payments at any time. If this happens and they don’t just walk away, then you could end up going through the foreclosure process.
Repair cost: If you do take back the property (for whatever reason), then you might end up having to pay for repairs and maintenance, depending on how well the buyer took care of the property.

Seller financing has been around for years, and we do not see it going away anytime soon as it is usually the only surefire way to obtain financing for a mobile home on leased land.

Even though it is a mainstay in the mobile home industry many Sellers still prefer the idea of an all-cash purchase as opposed to holding the note for the Seller.

However, if the amount of cash the Seller is asking for the home is not affordable to you at the time, then certainly ask if the Seller will accept an owner financing option.

If the Seller is motivated enough to sell, they certainly might consider that a viable selling option to provide seller financing!

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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