Mobile Home Loan Interest Rates

If you are buying a mobile home, you need to understand interest rates and which type of mortgage is best for you.  Mortgages for mobile homes are very similar to regular homes.  Some banks tend to charge higher interest rates for a mobile home and have shorter term lengths for them as well.  

There are two basic types of mortgage interest rates: fixed interest rate loans and adjustable rate loans.  Fixed rates do not change over the life of the loan, and adjustable rates will change after a certain period of time.  

The advantage of a fixed rate loan, is you know exactly how much your loan payment will be every month for the life of your loan, it will not increase on you in a couple of years.

The advantage of an adjustable rate loan, you typically can get a very low interest rate for the first couple of years.  This can lower your monthly payment by several hundred dollars.  Many people will get the adjustable rate loan and then just before the interest rate increase, they will refinance their loan to a lower fixed rate.  However, you need to be careful, many lenders will charge a prepayment penalty to keep homeowners from refinancing their loan.

Adjustable rate loans will typically have a lower interest rate, especially during the introductory period.  However, if the interest rate changes, your new monthly payment could be much higher than if you had opted for a fixed rate loan to start with.  

Many people who have tried to refinance their adjustable rate loan have found that the equity in their home is less than what they owe on it.  As a result, they are not able to change their loan rates and many people are losing their home to foreclosure because they cannot keep up the monthly payment.

So before you finance your mobile home, you need to determine what interest rate you will be comfortable with, and keep in mind what could happen if your home decreases in value at the same time the interest rate increases.