How to Get the Most Out of Your Mobile Home Equity With a Cash-Out Refinance

While many people have heard of certain types of equity loans that can help them make everyday purchases, not many are aware of mobile home equity loans. But for those who own a mobile home, they can be a major help that free up finances and make life much more comfortable.

Some people believe that cashing these loans out is complicated and takes a lot of time and has many steps. But the reality is that doing so isn’t all that hard and can be done painlessly, even by someone who hasn’t tried it before.

Owning a mobile home can be an affordable way to achieve the dream of homeownership. As you pay down your mortgage loan over the years, you build equity in your home. Turning that equity into cash through a mobile home equity loan cash-out refinance can give you extra money to use for any purpose.

In this comprehensive guide, we’ll explain how cash-out refinancing works for mobile home owners. We’ll also provide tips for qualifying and getting approved, along with the pros and cons to weigh

What is a Mobile Home Cash-Out Refinance?

A cash-out refinance lets you tap into your existing home equity by replacing your current mortgage with a new, larger loan. The extra money above your old loan balance is paid out to you in cash.

For example:

Your mobile home is worth $100,000
You owe $50,000 on your current mortgage
You have $50,000 in equity
You get approved for a new $70,000 mortgage
After paying off the $50,000 old loan, you get the $20,000 difference in cash

Mobile home owners can use FHA, VA, and conventional loans to cash out refinance, depending on their goals and qualifications. The cash you receive is yours to spend as you see fit.

Pros of Mobile Home Cash-Out Refinancing

Here are some of the key benefits of tapping your home equity with a cash-out refi:

Access your equity: Turn the equity you’ve built up into usable cash. This extra money can be used to fund major expenses, purchases, or investments.
Consolidate higher-interest debt: Pay off and consolidate credit cards, personal loans, and other debts carrying higher interest rates into your lower mortgage rate through a cash-out refi. This can save money each month.
Finance home improvements: Fund renovations, upgrades, or expansions for your mobile home without taking out a separate loan.
Lower your monthly payments: If you refinance into a lower mortgage rate than your current loan, you may be able to reduce your monthly payments even after cashing out equity.
Shorten your loan term: You can choose to refinance into a shorter loan term, which builds equity faster over time as you pay down the principal quicker.
Switch lenders: If you want to move your loan away from an existing lender with poor customer service or high fees, you can switch lenders when you refinance.

Cons of Mobile Home Cash-Out Refinancing

There are also some potential downsides to keep in mind with a mobile home cash-out refi:

Closing costs: You’ll have to pay closing costs and lender fees, which can total 2-5% of your new loan amount.
Higher loan amount: Your new mortgage balance and monthly payments will be larger after cashing out equity.
Lower equity protection: With less equity remaining, your risk of owing more than your home is worth rises if values decline.
Potential for higher interest rate: If rates have risen since you got your original mortgage, your new cash-out refi rate could be higher.
Difficulty getting approved: Lenders are more cautious approving cash-out refinances compared to no-cash-out refis. You may not qualify if you have limited income or equity.
Risk of overleveraging: Tapping too much equity can leave you overextended, making it harder to manage your finances.

Tips for Getting Approved for a Mobile Home Cash-Out Refinance

If you want to cash out your mobile home equity, follow these tips for improving your approval odds:

Maintain a credit score over 700
Have at least 20% equity in your home
Keep debt-to-income ratio (DTI) below 50%
Show steady income history and stable employment
Choose a 15-year or 20-year loan term
Pick a reputable lender familiar with mobile home loans
Document assets and reserves
Be prepared to pay for an appraisal

Shopping with lenders like loanDepot that have experience with mobile home lending can streamline the process. Pre-qualifying also helps you verify likely approval before formally applying.

How Much Cash Can You Get from a Mobile Home Refinance?

As a general guideline, most lenders let you cash out up to 80% of your mobile home’s value through a refinance. So if you have 50% equity, you could refinance up to 80% of the value and get 30% in cash.

However, the maximum amount you can qualify to cash out will vary case-by-case based on:

The appraised value of your specific mobile home
How much equity you’ve built up
Your income, debts, and credit score
Which lender you use
Loan program guidelines

For example:

Home value: $150,000
Current mortgage: $60,000
Equity: $90,000
Max 80% refi: $120,000
Cash out amount: $60,000

Run the numbers on your mobile home and financial situation to estimate your potential cash-out refi amount.

What is the Process for a Mobile Home Cash-Out Refinance?

Here are the main steps to cash out your equity through a mobile home refinance:

Get pre-qualified – Find out if you may qualify and estimate potential terms
Compare lenders – Shop lenders to find the best rates, fees, and service
Formally apply – Complete loan application with income/asset documentation
Get appraisal – An appraiser will assess your mobile home’s current value
Underwriting review – Your full application will be verified and evaluated
Get approval – You’ll receive a formal loan approval and closing disclosure
Close on new loan – Sign documents to finalize the new cash-out refinance
Receive cash payout – The lender pays out your cash-out amount

The process takes 30-60 days on average from application to closing. Be sure to shop lenders, choose the best loan program for your goals, and provide all required documentation to streamline approval.

Questions to Ask Yourself Before Refinancing for Cash-Out

Since cash-out refinancing increases your mortgage balance, it’s smart to carefully consider:

How much cash do I expect to need soon? Don’t withdraw more than necessary.
What will I use the cash for? Know your purpose before tapping equity.
Can I handle higher monthly payments? Ensure you can afford the increased amount.
Will I stay in this mobile home long term? Shorter timelines make cash-out refis riskier.
How much equity do I have available? Review your current loan balance and home value.
Are rates lower now than my current mortgage? Compare to see if there are savings.
What closing costs will I pay? Factor fees into the total costs.
What loan program should I use? Compare FHA, VA, conventional, etc.
Will I end up overleveraged? Be cautious about draining too much equity.

By considering these key points, you can determine if a cash-out refinance makes sense or if you should wait.

Alternatives to Cash-Out Refinancing

If you need cash but want to avoid tapping your equity, here are a few options to consider instead of a cash-out mobile home refi:

Home equity loan – Borrow against your equity without refinancing your existing mortgage
Home equity line of credit (HELOC) – Gives you access to a revolving credit line based on your equity
Personal loan – Unsecured loans from banks, credit unions, and online lenders
Using home as collateral for a secured loan – Allows you to borrow against the value of your home
Credit cards – Can provide short-term financing for smaller cash needs
Downsizing – Sell your current mobile home and buy a less expensive one to cash out the difference
Renting out rooms – Generate rental income from extra rooms to bring in cash

Look at both lending and non-lending options if you want to tap home equity in the most cost-effective way.

Key Takeaways on Mobile Home Cash-Out Refinancing

Cash-out refinancing lets mobile home owners unlock their equity for any use, but consider these key points:

Cash-out refis allow you to replace your existing mortgage with a new, larger loan and receive the difference in cash
Tapping 80% or less of your equity is generally recommended as a safer amount
Cash from a refi can pay for home improvements, debt consolidation, investments, or other costs
Improving your credit and income stability helps approval odds and loan terms
Closing costs and the risk of lowering your

What is A Mobile Home Equity Loan?

What exactly is a mobile home equity loan and how does it work? Basically, a mobile home equity loan is a kind of financing that allows someone who owns a manufactured home to borrow an amount of money by evaluating and then leveraging the equity they have built in the property they own. 1

That explains that, but let’s go back even further. What is equity and how does that work? The most basic definition says that it is the difference between the current market value of a property and the outstanding amount of any loans or mortgages secured against it. In other words, it is a value that you can get for the property that you owe. 2

When you get the money from an equity, you can spend it on a number of things. Any everyday purchase can be made with the money from an equity loan, including a mobile home equity loan.

Now, in order to qualify for a mobile home equity loan, you usually need to meet certain standards, such as having a decent credit score, receiving a stable, regular income, and of course having a valuable equity for your property. This will all be determined by a team of lenders. These lenders might also require that the mobile home be attached in some way to a permanent foundation and classified as real property. 3 That isn’t always the case, but it sometimes might happen in order to get your equity.

The terms of any mobile home equity loan are going to be different depending on the lender that you use, but they typically include regular fixed interest rates as well as a repayment schedule that ranges from about 5 to 30 years on average. When it comes to repaying, you will be required to pay monthly, just like a to a traditional mortgage that you could get on a house. 4

Your mobile home is going to serve as collateral for your loan. This means that if you end up not paying back, or defaulting, on the loan, whoever lent you the money has the right to repossess your mobile home after you are warned and don’t make multiple payments.

How To Cash Out Your Mobile Home Equity Loan

So, let’s say that you want that equity, what do you need to do to get it? What is the process of taking the value of your mobile home and putting it into your hands?

After signing the loan agreement, your lender will then give you the loan funds. This can be done through direct deposit into your bank account or by issuing you a check.

Now, it’s important to remember that the time it takes to receive your funds can change case to case but usually it is within only a few days after the loan agreement is finished and agreed upon.

Once the money is in your hands, it is yours to do whatever you want with it. As mentioned before, you can use the loan funds for anything, such as home improvements, consolidating your debt, or other financial needs.

Manufactured Home Cash Out Refinance

FAQ

Can you do a cash-out refinance on a manufactured home?

Cash-Out Refinance Transactions To be eligible for a cash-out refinance, the property must be a multi-width manufactured home (single-width are not permitted). The borrower must have owned both the manufactured home and land for at least 12 months preceding the date of the loan application.

How does equity work on mobile homes?

There are several ways through which mobile homes can acquire equity. The most important one is by making mortgage payments on time. As the homeowner makes payments over time, the amount of equity in the mobile home increases, making it easier for them to sell, or refinance the home.

What disqualifies you from getting a home equity loan?

High debt levels In addition to your credit score, lenders evaluate your debt-to-income (DTI) ratio when applying for a home equity loan. If you already have a lot of outstanding debt compared to your income level, taking on a new monthly home equity loan payment may be too much based on the lender’s criteria.

Is cashing out home equity a good idea?

Cash out refi is beneficial if your rate is higher than the current market rate. It gives you a lower rate for the rest of your term as well as lets you take that one time cash out at that same lower rate. Downsides are the a refi fees/costs and you typically have to do a full appraisal.