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Manufactured and Mobile Home Glossary
Manufactured Homes vs Mobile Homes vs Modular Homes
Manufactured Home
“Manufactured Home” refers to homes built AFTER June 1976 when the HUD code governing building standards for factory-built homes was instituted, greatly improving quality standards. Technically, home built after June 1976 should no longer be referred to as “Mobile Homes”, however the term is often used interchangeably. “Manufactured Homes” are built to a higher standard of quality than earlier "Mobile Homes."
Mobile Home
The term “Mobile Home” is often used interchangeably with the term Manufactured Home but in fact they are technically different. "Mobile Home" refers to homes built PRIOR to June 1976
(when the HUD code governing building standards for factory-built homes was instituted, greatly improving quality standards). Mobile homes are usually placed in one location and left there permanently, but they do retain the ability to be moved.
Modular home
A “Modular home” is manufactured home built in a production facility in two or more sections then transported and assembled on location. The assembly process typically uses a traditional concrete foundation (permanent). Unlike a mobile home, a modular home cannot be moved once built.
General Loan Terms
Adjustable Rate Mortgage (ARM)
With an adjustable rate mortgage, the interest you pay on the principle (the amount borrowed) changes every one, three or five years, depending on the terms of your loan agreement. This means your monthly payment can go up or down, depending on the new interest rate established at the time of adjustment.
Amortization
In simple terms, it is the calculation that determines how much of each payment that goes toward interest versus the amount that goes toward the principle. An amortization table shows these details for the entire term of the loan. This table is used to calculate how much principle remains to be paid off if you refinance or pay off a mortgage.
Balloon Payment
A balloon payment is a payoff sum due at the end of the loan or at a date agreed to by the lender and borrower. They are often used to structure loans with lower monthly payments, but it is important to recognize that those lower payments only will pay for some of the loan, and at the end of the term of payment, a payment for the remaining balance (balloon) will come due.
Debt Ratios
Mathematical equations that help the lender assess your ability to repay your loan.
Debt Ratio – Debt to Income Ratio (DTI)
The percentage of debt you have compared to your income. Example - if your monthly debt payments are $1,000 (Car, Credit cards, etc.) and your monthly gross income is $3,000, your DTI would be .33 ($1000/$3000).
Debt Ratio - Housing Ratio
The percentage of your housing expenses compared to your income. Example - if your monthly housing payments are $1,500 (Loan and Space Rent combined) and your monthly gross income is $4,000, your DTI would be .375 ($1500/$4000).
Fixed Rate Mortgage
The interest rate on this type of mortgage never fluctuates. A fixed interest rate keeps your payments the same for the duration of your loan because the principle is drawn down consistently and the interest rate doesn’t change.
Rate and Term Refinancing
Obtaining a new loan to pay off a current note holder in order to get a better interest rate or payback term. No cash back to the borrower.
VOE (Verification of Employment)
In the process of finalizing your loan, the lender will require written verification of your employment from your employer, generally a letter on company letterhead stating the terms and status of your employment.
VOI (Verification of Income)
In the process of finalizing your loan, the lender will require written verification of your income. Typically two pay stubs (within 30 days), 2 years tax returns, and most recent W2’s satisfy this requirement.
Loan Process Terms
Appraisal
An appraiser will use comparable sales within the last 6 months (not listings) within the community, or other relevant communities. These comparable sales will be adjusted against the buyer’s subject property to determine fair market value. This value is then used by the lender to determine the loan amount
Escrow
An escrow company is a neutral 3rd party between buyer and seller. California state law requires an escrow company be used on all mobile and manufactured home sale transactions involving a dealer. The escrow company will complete titling, tax clearance, fund distribution, etc. and is responsible for making sure buyer and seller interests are protected.
Credit Report
There are 3 major credit reporting agencies: Experian, Equifax, and Transunion. Using a credit report the lender will review current debt current past payment history, delinquent credit, etc. in order to determine the reliability of your payments.
Credit Score
Each credit reporting agency has a credit scoring system ( i.e. "fico" score). The system takes many factors into account, but ones score is primarily determined by your payment history and credit balances within the last 24 months. The score can range from 450 - 850. The higher the score, the better.
Payoff Authorization
This form is required by a lender offering a refinance loan. It allows them to pay off your current loan.
Power of Attorney
This form is needed for escrow and titling. This form gives the lender (or escrow agent) the right to title your home. It gives no other powers to the lender.
Right to Cancel/Right of Rescission
This form allows you to opt out of the contract within three days. Every refinance with a different lender must include this form by California law.
Same Name As
This form is needed to clarify your legal name. For example, if you sign your name with or without a middle initial, or if you have changed your legal name recently.
Specialty Loans / Additional Terms
"Buy For" Loan
Purchasing a manufactured or mobile home for someone else. The home will not be occupied by the buyer. An example of this is a parent obtaining a loan to buy a home for their adult children to live in. The Parents in this example would be responsible for paying back the loan.
“Cash Out” Refinance
Obtaining a new loan to take cash out of the equity one has built into their home. A cash out refinance may be taken out on a home owned outright buy the borrower, or it may also pay off a current note holder, so long as the loan to value ratio falls within the lenders guidelines.
“Chattel” Consumer Loan
A loan on ‘Personal Property (in this example a Manufactured Home), as opposed to ‘Real Property’.’
“Home Only” on Private Land
A loan financing only the manufactured home on a piece of private land. This is a chattel consumer loan.
“In Park” Financing
The financing of a manufactured or mobile home located in a rental/lease park. This is a chattel consumer loan.
“Leased Land” Mobile Home Loan
A loan on a manufactured or mobile home on leased land (typically a mobile home park). This loan finances the home only. This is a chattel consumer loan.
Lien
The method by which a lender (Lien holder) secures re-payment of the loan. When a borrower takes out a loan on a Mobile Home, a lien in favor of the lender is placed on the title of the home. This lien ensures that the lender will be paid before title of the home can be transferred to any other party. If a loan is defaulted on, the lien allows the lender to legally take possession of the collateral (mobile home)
Personal Property
Very basically, personal property is considered property that able to be moved – cars, boats, planes, mobile homes, are examples of Personal Property. Ownership of large and or expensive Personal Property is generally tracked / proven by title issued by the state the property generally resides in. Other types of smaller / lower value Personal Property are personal possessions – clothing, furniture, bicycles, etc. Loans on personal property are Chattel Loans.
Real Property
Very basically Property that is un-movable. Land, homes fixed to land, and buildings fixed to land are all examples of Real Property. Possession of Real property is generally tracked and proven by deeds recorded by the county the property is located in.
"Stated Income" Loan
A loan program designed for self employed applicants. When available, these programs typically require a significant down payment in order to evidence the borrowers ability and commitment to the loan.