By CLAY DICKENS
Featured in Santa Barbara News-Press House & Home.
Why do you call mobile homes “the last bastion of affordable living on the Central Coast”?
As housing prices have increased and homes in Santa Barbara and Goleta, in particular, have become more and more expensive, it becomes harder and harder for people—especially first-time buyers—to break into the market. This problem is exasperated by the city and county limiting the amount of affordable housing required in developments, particularly the amount of income-restricted condos. It is difficult for young families or people working in the service industry, for example, to afford a $700,000 track home, but they can afford a $200,000 mobile home. Many people use mobile homes as a way to break into the market, build equity and transition into traditional housing.
Who usually purchases mobile homes?
Everyone can benefit from purchasing a mobile home. They are most useful for breaking into the Santa Barbara housing market, maintaining lower monthly mortgage payments, downsizing houses or reducing maintenance costs and energy. Most frequently, I work with young families, who are just getting started, or seniors, who want less property to care for and more flexibility so they can travel more. There are parks specifically for seniors 55 and older. There are also several family park options. Families usually choose to move in the spring once school is out for the summer, so now is my busiest time.
Is applying and qualifying for a mobile home mortgage loan different than applying for a home mortgage?
Mobile home mortgages follow the same parameters as Fannie May and Freddie Mac lending to traditional single-family homes. Like traditional mortgages, mobile home mortgages look at income, credit score, etc. to determine if the applicant qualifies. However, some aspects of the application process are more complicated. For one, the applicant must get financial approval from the bank for the loan to buy the mobile home and from the park to become a tenant. This adds another entity into the process, which can complicate the process. In addition, before finally approving mobile home mortgages, the bank requires a home inspection report to decide what repairs need to be made to the mobile home before we will grant the mortgage. Banks don’t usually like to loan mortgages on mobile homes because there is no title on land with a mobile home, only title on the mobile home.
What is the interest rate?
This is one of the best questions to ask, but it is extremely complicated to answer. While interest rates are fairly straight forward with single family homes, mobile home interest rates are incredibly variable. One big factor is the age of the mobile home. Mobile homes built from 1990 to present will have the best rate. The interest rate gets higher as the age of the unit increases, and banks rarely, if ever, lend on a unit built before 1970.
Interest rates also depend on the type of loan and loan term. Other factors include, the amount of the down payment (most people put 20 percent down on a mobile home), the applicant’s credit score (there are discounts for high credit scores) and the applicant’s debt ratio (which looks at mortgage payment, insurance, student loans, car payments, etc.).
Once I qualify for a mobile home mortgage, is that the only payment I’ll have?
In addition to the monthly mortgage payment, mobile home owners pay personal property tax on their mobile home, insurance, utilities and space rent. Space rent varies depending on the park, but usually covers water, sewer and park maintenance.
I’ve heard mobile homes depreciate in value. Will I get caught paying more for my mortgage than my mobile home is worth?
Mobile homes follow the same housing trends as traditional homes—the value ebbs and flows with the market. During the last recent recession, mobile homes, in general, performed comparatively the same as stick build homes in their area. In that instance, mobile homes in some areas, were actually more stable than traditional houses. I have found that whether the market is up or down, mobile homes stay fairly consistent and remain an affordable way to enter the market.
If I want to look into buying a mobile home, what is the best way to get started?
The first place to start is to talk to a loan officer to discuss the different loan options available to you and to find out if you qualify. Unfortunately, not many banks will issue mortgage loans to mobile homes. I have been working primarily with mobile home buyers, helping them secure mortgages, for the past 18 years and have visited hundreds of parks from San Luis Obispo down to San Diego.
Clay Dickens NMLS #481260, is vice president and senior loan consultant at Community West Bank, a full-service bank focused on mortgage lending and small business administration lending in California. Mr. Dickens has been at Community West Bank for 20 years and has been the premier mobile home lender from San Luis Obispo to San Diego for the past 18 years. He is the co-chair of the Dream Foundation Board of Directors, past president of Fiesta and past president of the Kiwanis Club of Santa Barbara. To contact Mr. Dickens, call 805-692-4429 or email cdickens@communitywestbank.com.
Clay Dickens