January 2011
The down payment and loan percentage for just the purchase of the manufactured home (called chattel loan) is 20% down, with a minimum interest rate of 8% on the loan. If you do not purchase the land your land lease rent has minimal, if any deduction value on your state income taxes and none on your Fed income taxes. Loans for a manfactured home built prior to the 1972 HUD rules are difficult to find.
The down payment and loan percentage for the purchase of both the manufactured home and the land gives you the choice of 2 types of loans based on your down payment:
1) FHA Loan is 3.5% down + FHA fees, with an interest rate of 5 to 5.5% on the mortgage loan;
2) Conventional Loan is 20% down, with an interest rate of 5 to 5.5% on the mortgage loan.
Facts to Consider:
1) Purchasing both the manufactured home and land:
- You can increase the loan amount and have the option to decrease the down payment to 3.5%;
- Mortgage interest rate is less;
- Greater deduction for mortgage interest on your Fed and State tax returns;
- Greater resale value.
2) Purchase just the Manufactured Home:
- 20% down payment;
- Higher mortgage interest rate;
- Minimal deduction if any for land lease rent on your State tax return and none on you Fed tax return.
- Less resale value.
Now that you understand the different areas where you are going to spend you money, you need to put actual dollar amounts to each area so you can see where your money would best be spent. For that may I suggest Dave Brauchler. Dave is detailed orientated and articulate. He would be happy to discuss and help you with the numbers to apply to each scenario that is particular to your situation and the options available to you based on the information that you and Dave have just calculated.
Dave Brauchler
Land Home Financial Services, Inc
dbrauchler@lhfinancial.com
Office: 949-498-8719
Cell: 714-264-0873
Fax: 949-682-4843