Manufactured homes have grown in popularity since 2008 and are a common housing option for seniors. However, there seems to be a lot of confusion as to whether these types of properties qualify for reverse mortgage help. So they? Or do you demand the characteristics of your specific home?
The rebound
These types of houses have experienced a massive resurgence in popularity in the last eight years.
Warren Buffett and Berkshire Hathaway’s ability to survive and thrive during the 2008 crisis is largely attributed to manufactured home company Clayton Homes. Billionaire real estate investor Sam Zell continued to expand his portfolio of manufactured home communities through Equity Lifestyle Properties, even as he dumped billions of dollars worth of apartments from late 2015 to early 2016. Some Wall St. dealers even they have quit their jobs to invest in mobile devices and manufactured home parks.
Plus, we’ve seen an explosion of vendors offering everything from tiny houses, 100% green and sustainable homes, and upgraded manf. golf homes and resort communities in popular retirement and vacation areas.
So it seems more people are choosing manufactured homes again, and many have paid cash for them due to a shortage of loans. The big question is; Can they take advantage of reverse mortgages on these properties when they really need them later in life?
How to Get a Reverse Mortgage on a Manufactured Home
Yes, manufactured homeowners can enjoy the benefits of reverse mortgages and lines of credit. But there are restrictions.
The US Department of Housing and Urban Development (HUD) states that manufactured homes are eligible for reverse mortgages and home equity conversion mortgages. However, HUD also states that these loans are subject to FHA loan guidelines.
These guidelines change over time, but at a minimum households should:
Be built after June 15, 1976
Be at least 400 square feet
Be attached to a permanent base or chassis
Be built in accordance with federal building and safety regulations
It will be placed in its original brand new location from the manufacturer
Being located on a property owned by you
5 peculiarities to take into account
1. FHA guidelines can change
2. If the property is in a community, the community may also need to be approved
3. Current floodplain requirements could be affected as the government expands standards to account for 500-year floods (vs. 100-year prior)
4. Individual lenders can add their own demands in addition to HUD and FHA rules
5. HUD requires a foundation inspection to ensure the foundation meets FHA guidelines
Homeowners should also keep in mind that many lenders and brokers will simply dismiss inquiries about manufactured home loans instantly. Because? Because many simply aren’t used to making these loans and don’t want to bother learning. Others don’t want to deal with the smaller loan amounts normally associated with this type of property, compared to say luxury beach condos or jumbo loans for big houses. They just aren’t that profitable.
Summary
Technology and construction best practices, as well as today’s economy, make manufactured homes very attractive and profitable as a home or investment today. It is possible to obtain a reverse mortgage on this type of property. Just make sure you know which ones may or may not qualify, and try to stay ahead of the changing rules if you’re shopping for a manufactured home now. If lenders aren’t helpful at first, keep looking, there are reverse mortgage specialists who love to make these loans and are very efficient at doing so.