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In part 1, we noted that many manufactured homes are purchased with loans which have terms that make refinancing an absolute necessity. Owner financing or bank financing with high rates and/or balloon notes need to be refinanced as quickly as possible.

Let’s now explore the qualification and processing requirements for using an FHA insured loan to refinance a manufactured home. Most of these items should be handled by your mortgage professional, however it is useful for you to be aware of the guidelines yourself.

The first step is to determine whether the home was built after 1976 according to HUD Code. This is very easy. For each section of the home, you will find a HUD certification label attached to the end of the home. Adherence to the HUD code is the major difference between modular homes and manufactured homes.

This label will look like this:

There will be an identification number stamped into the label and later, the FHA appraiser will be required to verify that this label is affixed to the home.

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Purchasers of manufactured homes often use short term financing from a bank (for example, a five year balloon note) or short term, high interest rate owner financing to cover the cost of setting up their new home. Since each of these methods of financing the manufactured home must be paid off in a short period of time, owners of manufactured homes should begin looking for replacement financing as early as the end of the first year. The end of the first year is the beginning of the time that the loan can be based on the appraised value of the home instead of its original sales price.

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