A Guide for Manufactured Home Loans with Bad Credit
Besides finding your perfect manufactured home, the important step you should focus on is qualifying for a manufactured home loan. Sometimes you need help securing manufactured home loans with bad credit. Check out these three important things to consider, as these are factors that can prevent your manufactured home loan pre-approval.
- Credit Score
A manufactured home lender will check your FICO score before deciding whether or not to offer you a manufactured home loan. This score will also decide the interest rate your loan package is set at. You can get a copy of your credit report from one of the three major credit reporting agencies: Equifax, Experian, and TransUnion. Once you get the report, review it carefully for any errors that may affect your credit score. Discrepancies like misspelled names, incorrect addresses, credit accounts you know nothing about and outstanding debt that you’ve actually paid off can reduce your score and prevent your manufactured home loan approval, so getting those mistakes taken care of ahead of time is pivotal.
Working with agents to fix any and all errors prior to applying for your manufactured home loan will allow you to increase your credit score. An increased score will help your case for approval in the manufactured home loan process.
- Down Payment
All manufactured home loans require a down payment. However, loan approval is not only concerned with whether or not you can make a payment but just how much that down payment actually amounts to.
There is no definitive number on what the down payment total should be. Every home is priced differently and is sold under different circumstances, but asking your loan originator will help you decide what the best route for purchasing will be. Type of loan, credit history, and score, and price are all taken into account to decide that number. On average, the higher the down payment is the lower your interest rate and monthly payment.
Land-in-Lieu manufactured home loans allow purchasers to use the equity in their land instead of a cash down payment. Land can be used for some or all of the down payment, and for purchasers with bad credit, this could be a great alternative to a cash in hand.
- Debt-to-Income (DTI) Ratio
To calculate your DTI ratio, add up all of your monthly debt payments, divide the result by your gross monthly income, and then multiply by 100. Expressed as a percentage, the DTI ratio enables manufactured home lenders to better understand borrowers’ ability to manage loan repayment. Debt that exceeds 43 percent of monthly gross income is usually denied, under the Ability-to-Repay rule. If your total debt is $2,500 a month, for instance, and your gross monthly income is $7,000, your DTI ratio is approximately 36 percent. This is within most manufactured home loan requirements.
Your employment history, existing loans, credit cards, savings accounts, and other determining criteria are r manufactured home loan approval.
The best advice that can be given is to work with a lending house that has extensive experience and industry knowledge. They are the ones that are able to offer you the right type of manufactured home loan.