Manufactured Home Refinancing: Understanding the Impact of LTV

If you’re house-hunting on a budget, you might be curious about manufactured homes. They tend to be more affordable than stick-built homes, and they have a lot to offer. How does the mortgage process work when a manufactured home is the property of interest? Can you refinance a mortgage on a manufactured home?

MortgageDepot has the answer to these questions! Today our focus is going to be the loan-to-value ratio (LTV for short). If you’re interested in purchasing a manufactured home or refinancing your current loan, MortgageDepot has specific guidelines for LTV calculations.

Question #1: What Is a Manufactured Home?

Do you remember mobile homes of the past? Manufactured homes are the modern version. They offer more comforts, conveniences and custom features than mobile homes of yesteryear. While mobile homes are constructed on a chassis with wheels, manufactured homes lack that mobility. Once you decide where you would like to plant your roots, your manufactured home will remain there.

Manufactured homes are constructed in a factory. Manufactured home builders follow strict regulations enforced by the U.S. Department of Housing and Urban Development.

Question #2: What Is the Loan-to-Value Ratio?

The LTV is the relative difference between the market value of a home and the loan amount. Here’s an example:

Let’s say that you want to purchase a home that appraises at $200,000. After you pay the down payment, you’ll need a loan for $150,000 to seal the deal. Given these numbers, your LTV is 75% ($180,000/$200,000). That’s pretty good! Lenders like to see an LTV of 80% or less. If your LTV is higher, don’t stress. MortgageDepot can still help you get approved.

Let’s Talk Refinancing: Guidelines for LTV Calculations on a Manufactured Home

If you own a manufactured home and want to do a rate/term refinance on your current mortgage, MortgageDepot follows a specific set of guidelines to make it happen. Here’s the deal: If you have owned your home for one year or more prior to the refinance application date, we use the current appraised value. If you have owned your home for less than one year and the land has a separate lien, things get a little tricky. In this case, the value is the lower of:

• The current appraised value of the home and land combined or:
• The lowest price the home sold for in the previous 12 months and:
  • The lower of the current appraised value of the land or:
  • The land’s purchase price.

Is this tough to grasp? Don’t worry! At MortgageDepot, it’s our job to guide you through confusing situations so that you can emerge a savvy homeowner! Contact us today to learn more about refinancing your manufactured home.

Connect with one of our loan consultants to learn more.