Mobile Home Buying Basics

So, I started looking into mobile home buying. I knew almost nothing about them, and especially how they differed from traditional site-built homes, so I was basically starting from square one. The first thing I found out is that mobile homes are much less expensive than traditional housing. I already knew they were cheaper, but I did not realize how much cheaper, at least compared to housing prices in the Bay Area. Then I found out that banks will finance mobile home purchases, and they only require 10% down instead of 20%. After doing some quick math, I realized my monthly mortgage payment would be just a fraction of what it would be for other housing. There's got to be a catch, right? Well there is, sort of.

First of all, mobile homes aren't expected to last as long as traditional housing, so banks don't want to give you a mortgage for longer than 15 years. That is good, though, since even though your payment will be a little bit higher than with a 30-year loan, you will pay down the balance a lot faster and build equity sooner. And with proper maintenance and care, a mobile home can easily last 40 years or more. I could actually own my place outright after just 15 years!

Another catch is that interest rates are higher for a mobile home loan since there's always the risk you could hitch your home up to a trailer and skip town without telling the bank, taking their collateral with you. But the difference in rates is not that much, regardless of your credit, and considering how much less the loan amount is, the monthly payment is still quite small.

The biggest catch with mobile home buying is that your mortgage payment isn't the only part of your monthly housing expense. The reason mobile homes cost so much less than traditional homes is because you're only buying the home itself, not the land under the home. Here in the Bay Area, it's the land value that inflates home prices so much. With a mobile home, you rent the land for your mobile home each month, usually in a mobile home park. Of course, this means that you are still throwing away some money each month, but it's a lot less than with an apartment, and you still get equity build-up with mobile home buying, unlike an apartment renting which gets you nothing.