Investigation of Current Industry Strategies to Reduce the Cost of Financing a Manufactured Home
Publication: Journal of Architectural Engineering
Volume 29, Issue 3
Abstract
The cost and process when financing manufactured homes (MHs) are the greatest barriers to owning them. MHs are considered personal properties and do not qualify for conventional real estate loans with lower interest rates than personal (chattel) loans. The resulting higher financing costs present a major obstacle to the lower-income demographic, who are the predominant purchasers of MHs. Recently, strategies have been implemented to permit MHs to be considered real property; therefore, making them eligible for a conventional mortgage. However, most MHs do not qualify for conventional loans and must apply for higher-interest chattel loans. To the best of the authors’ knowledge, this area has not been investigated by academia or industry. Therefore, there is a gap in the literature on financing an MH. This study reviewed various methods for financing MHs and their corresponding loan terms, interest rates, down payments, and advantages or disadvantages. This study included Federal Housing Administration (FHA), chattel, and conventional loans. The aim was to identify the best approaches to reduce the cost of financing an MH that was based on specific conditions, such as the land ownership of the property and the type of foundation. Strategies, such as providing land lease communities for MHs to qualify them as real properties, were discussed. Recommendations were made to reduce ownership costs for manufactured houses to benefit the homeowners, MH industry, and mortgage companies.
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Acknowledgments
This study is part of sponsored research by the Department of HUD. The authors would like to acknowledge the support from the participants in the charrette for their suggestions that led to the successful completion of this study.
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Journal of Architectural Engineering
Volume 29 • Issue 3 • September 2023
Copyright
© 2023 American Society of Civil Engineers.
History
Received: Jun 16, 2022
Accepted: Jan 31, 2023
Published online: Apr 18, 2023
Published in print: Sep 1, 2023
Discussion open until: Sep 18, 2023
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- Maryam Kouhirostami, Abdol R. Chini, Robert J. Ries, Evaluating the GHG Emissions of Manufactured Housing through a Comprehensive Life-Cycle Assessment, ASCE Inspire 2023, 10.1061/9780784485163.100, (867-876), (2023).