If you have purchased a mobile home, you may have done so with a mortgage loan, a chattel loan or simply a personal loan. In any case, if your monthly payments have become too much of a burden or if you just want to repay your loan sooner or improve the terms and conditions of your loan because your credit has improved, what you need is refinancing.
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It is possible to refinance a mobile home loan, yet, it is not such an easy task when compared to home loan refinancing. There are several reasons for this but the main ones are undoubtedly the fact that mortgage home loans are a wider market than mobile home loans that are simply a small niche of the financial industry and also due to the fact that mobile homes are still vehicles with values that are reduced over time.
Mobile Home Loans: Mortgage, Chattel or Unsecured Personal Loan
When you purchased your mobile home you may have done so with the aid of different financial products depending on the terms of the purchase. For instance if you purchased the mobile home plus the land in certain states you can obtain a mortgage loan and secure the debt with both the mobile home and the land, if the land is not included and only the mobile home secures the loan, then you are applying for a chattel loan and if there is absolutely no collateral then the money is obtained from an unsecured personal loan.
Refinancing each of these financial products is a different process and therefore has different costs. Some of these loan products are easier to refinance than the others and therefore you need to know these differences beforehand in order to understand which possibilities in terms of refinancing your mobile home debt you have. In any case, refinancing is possible but the costs may persuade you against the idea.
Issues with Mortgage And Chattel Loans
Unfortunately, refinancing a mortgage loan with your mobile home is not as easy like refinancing a mortgage loan with a regular property. The reason is simple, while most houses and condos maintain or increase their value over time and thus, equity builds due to that and due to the reduction of the debt secured by the property, mobile homes depreciate and thus, equity builds at a lower pace if it builds at all.
Chattel loans have exactly the same problem, the mobile home being used as collateral depreciates and the value of the property covers a lower portion of the loan each year even as the debt gets paid. Moreover, mortgage loans have an advantage over chattel loans because the land is included and the land usually does not depreciate thus maintaining an important part of the collateral’s value.
Personal Unsecured Loans
Personal unsecured loans are much easier to refinance because even if your current lender does not want to provide you with a new repayment program, as long as your credit is fair and your income allows it, you can obtain another loan with your desired terms and use the money to cancel the previous loan in advance. You should beware however of prepayment penalty fees.
Moreover, if you can obtain a secured loan instead (using your mobile home and or the land as collateral), you will get more advantageous terms on your loan and you will be able to cancel the previous loan while getting additional funds for any other purpose.