Getting a loan for your Mobile Home
Today, Mobile Homes are one of the cheapest way to own your own home. They are traditionally built as lower-income housing. As we’ve found out in this article, however, low-income does not mean low quality. At the end of the day, a Mobile Home is still a house. Almost everyone has a credit score, but not everyone has the coffers to pay for a mobile home in cash. That’s where a loan comes in.
Getting a loan for your mobile home may be the easiest thing you’ve done during the week, or may be difficult, depending on the requirements. There are many types of homes that can fund your mobile home, USDA loans, FHA loans, personal loans, or construction loans. Some of them pay for your house outright, while some of them may disburse funds depending on the step you’re at with obtaining your new manufactured home.
Whatever the loan, you will need a credit score for all of them. You may not need an amazing credit score, but you’ll need a credit score nonetheless. How do you get a credit score? By using credit of course! Getting a credit card, or obtaining a small loan (like for a car) are two popular ways to build your credit, which you’ll need to get a loan on a larger purchase like a house. We’ve included some tips on how to build your credit score in order to be eligible for a manufactured home loan below.
First, discover your credit score
If you want to improve your credit score to apply for a loan, you’ll need to know what that score is in the first place! Thankfully, you can simply get a free credit report here. (note, if you’ve never used credit, you won’t actually have a credit score!) There are several credit bureaus that issue scores, and you are legally entitled to obtain a free score from each of them, once a year. Visit the Annual Credit Report website to get in the know. Once you’ve got your credit score, you can either apply for your loan, or if you spend money like I do, you’ll need to work on your score a bit.
Spend less...much less
One of the biggest factors in your credit score is how much you spend vs how much you have available to spend. For example, if you’ve got a credit card with a $5,000 limit and spend $4,900 every single month, this will reflect poorly on your credit score. Banks want to see that you’re responsible with your available credit, and although those new shoes may be tempting, they want to see that you don’t use all of your credit, every month. By spending only a small percentage per month, this shows lenders that you’re not prone to impulse buying and can responsibly pay off your card each month. TIP: Dedicate certain purchases to your credit card. You could make a rule for yourself where you only use your credit card to pay for gasoline. Unless you’re driving a hummer, this will likely use only a small percentage of your credit and look great to the credit bureaus. A couple more steps and you’ll be all set to use that card to buy a mobile home!
Recover lost credit if you can
Let’s face it, sometimes times get tough and you need the credit you have available to you. There are times when it’s unavoidable to use all of your credit, or more likely, to miss a few credit card payments. Even just a couple missed payments may severely affect your score. The good news is that banks make it easy to recover this score. If you can commit to on-time, full payments to your credit card for as little as 6 months, your credit score will quickly recover. TIP: You can apply for a “secured” credit card for even faster credit building. What is this? You basically put a deposit on the card that they hold as collateral in case you cannot make a payment. Because you’ve got some skin in the game, you’ll potentially have a higher credit limit, and it’s easier to build a credit score with a high credit limit. It’s just math!
Pay off the cards, you'll thank us!
It may seem obvious, but you really should be paying the FULL amount due on your credit card each month. The truth is, the credit card companies would actually prefer that you pay the minimum. Any amount over the minimum they’ll calculate interest on, and charge that to you the next month. In the long run, you’ll be paying much more by allowing them to “hold” that amount, than if you just paid it off in the first place. Paying the entire balance on your credit card every month will do wonders to your credit score.
Don't go on a spending spree (right?)
We’ve had this happen far too many times at Home Nation. A customer will just barely become eligible for a loan for their new (beautiful) manufactured home. In between becoming approved for the loan, and paying for the home, they will then go out and make a large purchase on credit. Even though they’ve already been approved, this purchase will significantly affect their credit score and make them ineligible for the loan they just applied for. Why? Because your debt-to-income ratio will go all out of whack. When that ratio plummets, you will no longer be viewed as a prime borrower to the bank, and will be pushed aside for someone that spends much smarter. TIP: Don’t make any large purchases after you’ve been approved for your mobile home loan.
Stick to one account
A newbie mistake a lot of our customers make is applying for every credit card under the sun. Obviously, if you were approved for every credit card under the sun you wouldn’t be able to pay them all off. Credit bureaus actually factor in the number of applications into your credit score. So, if you’re trying to get that credit score back up in time to order a home from Home Nation, make sure you only apply to credit cards that you know you’ll be approved for, and don’t apply to too many! Think about it, if someone is applying for as many credit cards as they can, they probably are not a frugal spender. Like we said before, just get a “secured” credit card and you’ll be there in no time. And remember, a better credit score means less money paid in interest! Saving you money in the long run.
Don’t forget, Home Nation actually offers our own in-house financing options to select customers. We can often get loans to customers that may not be eligible anywhere else. How? We can use your land for collateral, or can take a much larger downpayment that will reduce the overall amount you need to loan for your manufactured house.
