Personal Loans: A Flexible Way to Finance a Manufactured Home

I’ve been dreaming about buying my own home for years As a millennial with student loans and rising rents, homeownership always felt just out of reach. But when I started researching manufactured homes, I realized this affordable option could make my dream a reality

Manufactured homes offer the perks of homeownership at a fraction of the cost of site-built houses. The average sales price for a manufactured home is around $82,000 – about half the median price for a traditional single-family house. With manufactured homes, you avoid the hassles and fees of new construction too. The home is built in a factory and delivered to your site mostly completed.

As tempting as a manufactured home was I still wasn’t sure how I’d get approved for financing. Manufactured homes are classified as personal property instead of real estate. This makes getting a mortgage tricky. After talking to a few lenders, I learned that personal loans can be a simple and flexible way to finance the purchase of a manufactured home.

Here’s what I discovered about using a personal loan to buy a manufactured home:

What is a Personal Loan?

A personal loan is an installment loan from a bank, credit union or online lender. It’s an unsecured loan, meaning you don’t have to put up any collateral.

Personal loans can be used for just about any purpose – debt consolidation, home improvement, medical bills, or even buying a car or manufactured home. The lender doesn’t ask what you need the money for. You simply apply, get approved for a loan amount based on your credit, and receive a lump sum.

Personal loans typically have fixed interest rates and terms of 1 to 7 years. The application process is quick and funding can happen in as little as 1-3 business days if you’re approved.

Benefits of Using a Personal Loan for a Manufactured Home

After researching mortgage and personal loan options, I decided a personal loan was the best fit for financing my manufactured home purchase. Here are some of the biggest benefits that drew me to a personal loan:

Simple Qualification – With a personal loan, the lender mainly looks at your credit score and history. There’s no need to document your income or provide a down payment like with a traditional mortgage.

Fast Funding – I found lenders promising funds in less than a week if approved for a personal loan. Waiting 30+ days for a mortgage wouldn’t work with my home purchase timeline.

Less Restrictive – Personal loans allow more flexibility in how you use the funds and don’t require home inspections or appraisals. I can use a personal loan to buy a used manufactured home from a private seller instead of being limited to dealer financing.

Lower Fees – No home appraisal or origination fees make personal loans less expensive upfront versus mortgages. This helps maximize how much I have to put toward the home purchase itself.

Deal Directly with Sellers – With a lump sum from a personal loan, I can negotiate with sellers directly instead of going through dealers offering financing. Less intermediaries means more control and potentially better deals.

Steps to Get a Personal Loan for a Manufactured Home

If you’re considering a personal loan to finance a manufactured home, here are some key steps:

1. Check your credit – Good credit in the 670+ range is needed for approval and affordable rates. Review your credit reports and resolve any errors. Aim for a score over 700.

2. Calculate your loan amount – Add up the home purchase price, any transportation/setup costs, loan fees, and closing costs. This is the minimum you’ll need to borrow.

3. Research lenders – Compare loan amounts, rates, and terms from online lenders like Lightstream, SoFi, and Upstart. Look for competitive rates and flexible terms up to 7 years.

4. Complete the application – Pick a lender and apply online. You’ll need personal and employment details. Approval can take 1-5 business days.

5. Accept the loan terms – If approved, carefully review the loan agreement and make sure you understand the repayment terms, fees, and other details before signing.

6. Get an independent home inspection – Use a portion of the loan to hire an inspector to evaluate the home before purchase.

7. Finalize purchase – With funds from the personal loan in your account, you can work with the seller directly to close the sale.

8. Make repayment a priority – Be sure to budget for the monthly loan payment to avoid late fees or credit damage. Pay down the balance early to reduce interest costs if possible.

Personal Loan Rates and Fees

Interest rates and fees on personal loans can vary significantly between lenders. I compared offers from a few top lenders to find the best rates. Here’s an overview of what to expect:

• Interest Rates – For borrowers with good credit (scores 720+), rates on 3-5 year personal loans range from 5% to 36%. The lowest rates I found were around 5-10% APR.

• Origination Fees – Upfront fees range from 0% to 8% of the loan amount. Many lenders I compared did not charge origination fees.

• Prepayment Penalties – Personal loans rarely have prepayment penalties for paying off your balance early. But it’s wise to verify a lender doesn’t charge this fee.

Based on my research, I decided Lightstream offered the optimal rate and fees for my situation. But be sure to compare multiple lender offers tailored to your specific credit profile and loan needs.

Pros and Cons of Personal Loans for Manufactured Homes

Like any financial product, personal loans have both advantages and drawbacks to weigh:

Pros

• Fast and easy qualification
• Quick access to funds
• Fixed interest rates and terms
• No home appraisal or inspection required
• Lower upfront fees than mortgages
• Can negotiate directly with sellers

Cons

• Higher interest rates than mortgages
• Shorter repayment terms
• No homeownership tax breaks
• Limited purchase protection compared to mortgages
• Potential prepayment penalties with some lenders
• Cannot be used for home construction

For me, the speed and flexibility of getting a personal loan outweighs the higher rates and lack of tax perks. But carefully compare the pros and cons against your own home financing needs.

Alternatives to Personal Loans

Though convenient, personal loans may not be the optimal financing solution for everyone. Here are a few alternatives I considered:

FHA Loans – These government-backed mortgages only require 3.5% down and have lower credit score requirements. But they have stricter home eligibility standards.

USDA Loans – For buying a manufactured home in a rural area, USDA loans offer 100% financing and competitive rates. The home must be in an approved community.

VA Loans – For qualifying military members, VA loans offer 100% financing and easier credit requirements for buying a manufactured home.

Dealer Financing – Manufactured home dealers often offer in-house financing which can be easier to obtain than external loans. But interest rates tend to be higher.

401(k) or Retirement Fund Loans – You may be able to borrow against your own retirement savings and pay yourself back over 5 years to avoid tax penalties.

Talk to a loan officer or financial advisor to review all your home financing options before deciding if a personal loan is best for your needs.

Is a Personal Loan Right for You?

I decided a personal loan was the quickest and easiest route to finance my manufactured home. But make sure you evaluate the pros, cons, rates, and alternatives carefully based on your financial situation.

Key questions to ask yourself:

• How quickly do you need financing? Personal loans fund faster than mortgages.

• How much can you afford for a down payment? Personal loans don’t require a down payment.

• How long do you plan to own the home? Shorter personal loan terms may not fit long-term plans.

• How stable is your income? Proof of income may be required for other financing options.

• How strong is your credit history? Poor credit will make any financing more challenging.

• Are you eligible for alternative options like VA or USDA loans? Different programs have unique requirements.

While not the right solution for everyone, a personal loan simplified the process of securing the funds I needed to finally purchase my dream manufactured home. After months of research and saving, I’m thrilled to start building equity and enjoying my own space. Homeownership is within reach thanks to the flexibility of personal loans.