Factory Built Home Mortgages

Factory built homes can be a financially feasible option for many individuals. In most cases, factory built homes can be much more affordable than other housing options; which has made them very popular over the last few years. Individuals who are considering the purchase of a factory built home should understand how factory built home mortgages work, however.

The most important thing to understand about factory built home mortgages is that in most cases they work just like any other mortgage. This means that the full amount and term of the loan is amortized over a specific period of time. Usually, individuals who choose to purchase a factory built home can finance their purchase over a period of 15, 20 and even 30 years.

Secondly, most mortgage companies and lenders still require a buyer to put a down payment on the purchase of a factory built home. The mortgage down payment is normally a percentage of the total loan price, so depending on the cost of the home the required down payment may be a thousand dollars or more.

There are both advantages and disadvantages to choosing a factory built home over a traditional home. While factory built homes can be cheaper, and result in smaller monthly mortgage payments, homeowners may realize they have a problem should they attempt to sell the factory built home before their mortgage loan is paid in full. If the factory built home is not placed on a permanent foundation, chances are the home will not appreciate in value over the course of the loan. Traditional homes normally appreciate in value at least 3 or 4% each year. This means that even if the homeowner decides to sell their home before they have paid off their mortgage, they will usually be able to receive enough from the sale of the property to pay off the loan and still have some money to put towards the purchase of their next home. When a home does not appreciate in value, and in fact may depreciate, it can be difficult to even pay off the mortgage let alone have enough money for anything else. Finally, it is important to realize that while owners of traditional homes have many choices in home equity loans and mortgage refinance options during the course of their mortgage loan, this may not be true for owners of factory built homes. Refinancing for factory built homes is not allowed in many states.

Factory built homes can be a good choice for many individuals for a number of reasons, however it is always important to fully compare the advantages and disadvantages of a factory built home mortgage versus a traditional home mortgage before a final decision is made.