Buying a manufactured (mobile) home
There are advantages and disadvantages in buying a manufactured versus a site-built home.
Manufactured or mobile homes have come a long way from the boxy trailers of yesteryear. Today, many have amenities on par with typical single-family homes with fireplaces, big kitchens, garages, and a front porch. You can even find them today on the beaches of Malibu, fetching as much as $1 million.
Cost
Unlike homes built on site, most manufactured homes are bought at retail centers, owned by manufacturers or independent dealers. They range in price from $15,000 to over $100,000 (not including land) depending on their size, style, furnishings, and floor plan. A used house can generally be purchased for under $50,000, contingent on the condition and location of the home.
Financing
Interest rates on financing can vary widely depending upon whether you own or rent the land under your mobile home. If you own the ground beneath you, then typically you can get the same financing deals available to owners of site-built homes. Manufactured homes on rental sites, however, are not considered real estate, but chattel, which is personal property similar to a car or a boat. Therefore you can expect to pay higher interest rates and get a shorter term loan -- typically no more than 15 to 20 years compared with 30 years on a conventional home loan. You are also usually required to have a down payment of at least 5 to 10 percent.
The number of lenders who finance manufactured homes is limited, so often your best bet is to seek a loan through the dealer. Or, for a list of lenders, visit the Web site of The Manufactured Housing Institute: www.manufacturedhousing.org.
Taxes
If you own your site, the interest and real estate taxes on the mortgage for the home and land can usually be deducted on your federal income tax return. The mortgage interest on manufactured housing on a rental site is also deductible, but rent payments on the site typically are not, unless it is being leased for 15 or more years.
However, renting a site may mean you won’t have to pay real estate taxes. Homes on rental sites are taxed as personal property, so they carry a book value (estimated average retail value based on age and condition of home) similar to a car. Since most mobile homes depreciate over time, their book value declines, as do personal property taxes. Consult a tax advisor about your particular situation.
Warranties
Manufactured homes often come with numerous different warranties. Be sure to read and compare the coverage before you buy. Typically, warranties come from the manufacturer, retailer, transporter, installer and appliance maker and cover structural defects, factory-installed plumbing, heating and electrical systems and factory-installed appliances.
Published on August 01, 2006
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