Manufactured homes have surged in popularity since 2008, and are a common housing choice for seniors. Yet, there appears to be a lot of confusion over whether these types of properties qualify for reverse mortgage help. So do they? Or does it demand the features of your specific home?
The Rebound of Manufactured Homes
Manufactured homes have experienced a massive resurgence in popularity over the last eight years.
Warren Buffett and Berkshire Hathaway’s ability to survive and thrive through the 2008 crisis is largely credited to manufactured home company Clayton Homes. Billionaire real estate investor Sam Zell has continued to expand his manufactured home community portfolio through Equity Lifestyle Properties, even while shedding billions of dollars in apartments from late 2015 to early 2016. Some Wall St. traders have even ditched their jobs to invest in mobile and manufactured home parks.
Additionally we’ve saw an explosion of manufactured home vendors offering everything from tiny homes, 100% green and sustainable homes, and upgraded manufactured homes for golf and resort communities in popular retirement and vacation areas.
So more people appear to be choosing manufactured homes again, and many have paid cash for them due to tight lending. The big question is; can they leverage reverse mortgages on these properties when they really need it 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 U.S. Department of Housing and Urban Development (HUD) states that manufactured homes are eligible for reverse mortgages and HECMs (Home Equity Conversion Mortgages). However, HUD also states that these loans are subject to FHA loan guidelines.
These guidelines do change over time, but at a minimum homes must:
• Be built after June 15th, 1976
• Be at least 400 square feet
• Be attached to a permanent foundation or chassis
• Be built to Federal Manufactured Home Constructions and Safety Standards
• Be placed in its original location brand new from the manufacturer
• Be located on property you own
5 Quirks to Watch Out For
1. FHA guidelines can change
2. If the property is in a community, the community may also have to be approved
3. Current flood zone requirements could be impacted as the government extends standards to account for 500-year floods (versus the previous 100 years)
4. Individual lenders can add their own demands on top of HUD and FHA rules
5. HUD requires a foundation inspection to assure the foundation meets FHA guidelines
Manufactured homeowners must also keep in mind that many lenders and brokers will simply instantly dismiss inquiries about loans for manufactured homes. Why? Because many just aren’t used to make these loans and don’t want to bother to learn. Others don’t want to deal with the smaller loan amounts normally associated with this type of property, versus say luxury condos on the beach or jumbo loans for large homes. They are just not as profitable.
Summary
Better technology and building practices, as well as current economics make manufactured homes very attractive and profitable as a home or investment today. It is possible to obtain a reverse mortgage on these types of properties. Just make sure you are aware of which ones may or may not qualify and try to stay ahead of changing rules if you are purchasing a manufactured home now. If you don’t find lenders helpful at first, please call me, I love making these loans and am very efficient at it.
