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Applications:
We require no paperwork prior to obtaining an approval. The 10 minute application
can be taken over the phone, faxed in or filled out online. Usually we can
give you an answer in 2 to 3 working days. Applications must contain the
complete home information.
Combining
Incomes to meet the 45% DTI requirement. Although any person
can be added to the loan as a Co-Applicant, in most cases only husband and
wife can combine their incomes to satisfy the DTI. In certain rare instances
two relatives who have established credit together over several years can
combine incomes. All others must stand alone.
Comparable Sales:
All sales of mobile homes in California are required to be reported to the
State. The State compiles lists of these sales by Park showing first sold
price, last sold price, date of sale and age and size of home. These lists
are called “comps” and appraisers use this information in determining the
value of a mobile home. In states where comps are not available the appraiser
must rely on the “book” value of the home. The “book” is compiled by the
N.A.D.A. (National Automobile Dealers Association) and is similar to the
“Blue Book” for autos.
Decal Number is equivalent to a
license plate on a car and it is important because both the bank and the
escrow company use it to search title. It can often be found on a plate
attached to the front or back of the mobile home and on the Title and Registration
of the home. The decal number consists of three letters and four numbers
and usually starts with an “A” or “L.” Example: ARW2798 or LGB7035. In some
rare cases the decal will start with “JP.”
Down payments:
There are no “0” down programs. Down payments are dependent on age of home
and FICO score. Pre-HUD homes normally require a 20% down payment. FICO
guidelines for HUD homes: 700+ = 5%, 660 to 700 = 10%, 630 to 660 = 20%,
600 to 630 = 30% or 40%, below 600 = 40%, 50% or more. These are guidelines
only and can vary depending on circumstances.
DTI (Debt to Income
ratio): Sometimes called “Back End Ratio”, this refers to the percentage
of borrowers gross monthly income required to service all contractual obligations.
Normally, the maximum allowed is 45% but sometimes that can be increased
with a large down and/or a high FICO. When determining the DTI always include
the estimated payment for tCreated on 9/23/2005 4:01 PMhe new home plus
the space rent. Example: Gross monthly income = $3000. New home payment
$700, space rent $500, auto payment $450, credit cards minimum payment $300.
Total contractual payments = $1950. DTI ($1950 divided by $3000) = 65%.
In this case, the maximum allowed is 45% so this borrower would not qualify.
FICO
(Fair Isaac): We use Experian credit reporting agency and
their scores can be between 450 and 850. In general, a score below 600 will
disqualify a borrower, however occasionally a lower score can be approved
with a large down payment and other extenuating factors. Click here for
an informational PDF document explaining FICO.
Homes built 1970 or after can be financed in California
whether in a park or on land, on or off a foundation. Single wide homes
over 15 years old cannot be financed.
HR (Housing Ratio):
Sometimes called “Front End Ratio”, this is determined by the lender and
usually ranges from 30% to 35%. It is calculated by adding the new home
payment to the space rent and dividing the total by gross monthly income.
HUD: U.S. Department
of Housing and Urban Development instituted regulations for the manufacture
of mobile homes. Thus, homes built June, 1976 or before are called “Pre-HUD”
homes and those built after are “HUD.”
Interest Rates:
In general, rates are higher than conventional real estate rates. The age
of a home will often determine the rate and Pre-HUD homes carry higher rates
than HUD homes. Of course, other factors, such as FICO scores and DTI will
affect rates. At the present time, rates can be as low as 8.5% and as high
as14-16%.
Loan Approvals are issued in a different
manner than conventional real estate. In conventional real estate a borrower
is approved for a specified dollar amount and then looks for a home within
those parameters. With mobile homes the borrower must first find a home
and then the approval is issued for that specific home only.
Loans for mobile homes
are: “consumer loans” not “real estate” loans and are treated as
such by the state. There are no special programs for borrowers such as “First
Time Home Owners” or “Veterans.”
LTV (Loan to Value):
Most loans require an appraisal and usually the bank will stipulate the
LTV after reviewing the appraisal. The amount of loan approved by the bank
is almost always subject to the lesser of the sales price or the appraisal
including the comps report. 90% of appraised value is common.
Processing:
It usually takes 3 to 4 weeks after borrowers acceptance of the approval
to gather the required documentation, process through escrow and then be
funded by the lender. Provided the borrower supplies the required documentation
in a speedy manner.
Refinancing: Both Rate/Term and
Cash Back (debt consolidation) require at least a 640+ FICO score. Two refinance
programs are available depending on FICO score. The first will finance no
more than 80% of the original purchase price. (Not the current appraised
price) while the second will finance up to 65% of current appraised value.
Also, in most cases, the bank won’t return cash to the borrower; they will
pay third party debt only.
Stated Income:
is designed to allow those who have income that is difficult to
verify such as self-employed to qualify for a loan. Applicants are not required
to prove their income but it requires a 700 plus FICO score and a minimum
20% down.
Term: In general loans are for 15
or 20 years depending on factors such as down payment, FICO score and age
of home. Occasionally, higher loan balances will qualify for a 25-30 year
term.
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