If you own a mobile home and aspire to a greater level of financial wellbeing, a mobile home refinancing loan may be the right vehicle for you. Some mobile homes are financed with mortgages, but most are financed by personal property loans, or chattel loans. Relative to mortgages, personal property loans are usually more expensive and have shorter maturities. Mortgages are typically reserved for mobile homes that are permanently attached to the land. In these cases, both the home and land secure the loan.
Regardless of whether your existing loan is a mortgage or personal property loan, refinancing can be used as a wealth-building strategy. This is because personal property loans and mortgages are both governed by the same general principles:
All else being equal, refinancing to a lower interest rate lowers your payments and improves your cash flow.
Paying down your principal creates equity, which is the value of the home over and above the loan balance. If you have equity, you can borrow against it with a refinance home loan.
Personal property loan refinance vs. mortgage refinance
Personal property loans aren't as heavily regulated as mortgages, so lenders have more leeway to adjust rates, terms and fees. Since programs can vary greatly from lender to lender, comparison shopping is a vital step in the process.
Keep in mind that mobile homes do not hold their value as well as fixed homes do. This affects a lender's willingness to refinance the mobile home, as well as your ability to build equity. It may be difficult to refinance an older home, just as it's difficult to build equity in an asset that's declining in value. If you've been thinking about refinancing, start exploring your options now.
