by Dave Shanklin
“I own my manufactured home free and clear, and I need to borrow about $20,000 for home improvements. Can you help me?”
Nearly every manufactured home owner has at least one time inquired about a getting “cash-out” loan or a home equity loan for their in-park factory-built home. Especially since the financial meltdown of 2008, this question has been tricky.
While some local banks or credit unions may make such loans, when this question is asked from the major manufactured home industry lenders, most are incorrectly told it’s not possible.
However, there is a major credit union that has been making many loans to owners of in-park MH’s nationwide. It’s a major national MH lender, with a regional office based in Seattle (CU Factory Built Lending).
This credit union is the only known major national lender for cash-out loans for homeowners residing in MHC’s. But the loans come with restrictions and require stellar credit, and are only available for manufactured homes under 15 years old.
Therefore, only homes built 1998 and newer are eligible for a “cash-out” loan at present, due to the 15-year rule.
When I say “cash-out” I mean, assuming that you own the home free and clear, which many do, you can borrower up to 40% of the appraised value. I am estimating the cash-out limit. My experience has been that this is a reasonable amount to hope for, based on the appraisal.
As far as credit goes, you can call this a loan of “Biblical proportions.” In other words you will have to walk on water credit-wise to get an approval.
Most applicants seeking this type of loan in the past have needed to borrower the money to pay off credit cards.
Typically, if the applicant is in trouble with credit cards, most of the manufactured home lenders will decline them, even if their credit is otherwise timely and their scores are high. Too much credit card debt, in relation to your income, can be a major red flag with most of our MH lenders, even if you seem to be handling the debts well.
If the applicant is not in trouble with credit accounts and if their home is built 1998 or later, and in a well-managed MHC, and if the home is owned free and clear, and if their income is high enough, then this type of loan is possible.
Confused? Well, in other words, if you are the proud owner of a 1998 or newer MH in a well-run MHC, on a leased lot, with the home being owned free & clear, then it will need to appraise for at least double the loan amount, up to about $40,000 at least. Your credit will need to be absolutely pristine. Your income will need to be fully document-able.
If you feel that you fit all the above criteria, and if you have been considering applying for perhaps a $15,000 – $20,000 cash-out loan, then this might be a good time to send an email or make a phone call to this credit union. These numbers are conservative estimates based on this writer’s past experiences with this lender. Higher loan amounts may be possible case-by-case. You would have to contact the credit union for specific details.
As a disclosure, this lender does advertise on this website. Let me also explain that I work with other industry lenders, not just this one.
Don’t be shy, go ahead and try. Please be sure to read the above general guidelines because all of the above-mentioned details will probably be applied. Many will qualify who have perhaps been turned away by local banks.
This type of loan can be used to make home improvements, or to possibly pay off a car loan for example. You might be pleasantly surprised at the rate and terms if you get approved.
There are about 4-5 million people residing in MHC’s nationwide. I like advising people on financial matters for this very valuable part of our housing market.
My next column for Manufactured Home Living News will be about how to refinance a private “seller-carry” note for a manufactured home in a park. ##
Dave Shanklin, Empire Homes, Lending Division, Santa Rosa, CA, 800-401-3372. NMLS ID # 314463. MobileHomeLender@Gmail.com