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What You Need to Know about Park Model Home Financing


The perfect solution for those of us who want something different is a park model home. These homes provide a low-cost and flexible way to obtain a second home, vacation getaway, or even your primary residence. Despite this, financing a park model home is unfamiliar territory for most lending institutions as it falls under the unique classification of a recreational vehicle (RV). Familiarity with financial choices can assist those planning to purchase a home in making decisions that fit their budget and housing desires. This article explores the nuances of financing park model homes by reviewing the basics, what to watch out for, and important factors to consider when purchasing your park model home

What are Park Model Homes

Park model homes are smaller, manufactured dwellings typically for part-time or seasonal living. These so-called “tiny homes on wheels” are mounted on a chassis with wheels and generally less than 400 square feet. Though many park model homes can be used as longer-term housing, they are still technically RVs and, hence, designed to be easily towed.

As park model homes are classified as RVs, those regulations differ from residential building codes. As such, it can be difficult to get financing for one as many home-financing options like mortgages may not apply. All the same, a property not eligible for HUD regulations requires buyers to find other ways of obtaining financing.

Obstacles to Financing Park Model Homes

One of the main reasons park model homes are hard to finance is because they are considered recreational vehicles. In general, when it comes to the sale of manufactured housing, park models are an exception because they do not need to be permanently affixed to land for them to qualify. On top of this, most mortgage lenders treat park models more like a car than a house, meaning that conventional home loans are more difficult to obtain for them.

Park model homes for sale are not able to be financed using FHA, VA, or USDA loans, which are more suitable for site-built units and modular homes. The end result is that buyers are left with the task of seeking a different kind of financing, one which is developed to finance RVs or other personal property.

Other Financing Solutions

While getting a traditional home loan for park model homes can be a challenge, there are other ways to secure financing.

Personal Loans

Unlike mortgages, personal loans are unsecured as they do not need you to put your house at risk. This makes them easier for buyers who may not qualify for other types of loans. However, personal loans usually have higher interest rates and shorter repayment terms than standard mortgages. Personal loans can be flexible so that buyers can use the loan not only to purchase the home but also for related costs, like transit and site preparation.

RV Loans

Because they are RV’s, park model homes can usually be financed with an RV loan. These loans are for recreational vehicles, camper trailers, park model homes, and mobile homes. RV loans generally have better terms than personal loans, meaning lower interest rates and longer repayment periods. However, getting approval for an RV loan might require a better credit score and more down payment. In order to qualify, park model homes must meet certain criteria, namely having been registered as an RV with the state Department of Motor Vehicles.

Home Equity Loans/Lines of Credit (HELOC)

In addition, buyers who already have a home can also use a home equity loan or home equity line of credit (HELOC) for financing. This loan assists owners in getting the money they need from their primary residence, and this can be used for buying park-model homes. Many times, home equity loans have a lower interest rate and longer repayment term than personal or RV loans. However, that private property option is only available to homeowners with enough existing equity in their current home, and failure to repay the loan could put them at risk of foreclosure.

Leasing vs. Financing a Park Model Home

On top of covering the purchase price for a park model home, prospective buyers must also finance their ability to park or place the unit. Most park model homeowners utilize their homes seasonally at RV parks or campgrounds. Lot leasing is another common and quick option. It also offers the chance of leasing a lot to reduce the cost of ownership, as buyers will no longer need to purchase land.

Not everyone has a use for full-time RVing, and leasing space has a lot of appeal to park model home buyers, with various types of community services, utility hookups, and even maintenance included. However, leasing a lot includes monthly rental fees that can fluctuate depending on where it is located and what you receive in return for the money. Buyers who opt for financing on the home and land can build equity and customize their living space much more easily, whereas renters are strictly locked into what they pay now.

Other Out-of-Pocket Expenses to Plan for Besides Financing

Financing a park model home is just one part of the financial equation. Other costs to take into consideration include delivery and set up as well as utilities.

Delivery and Setup Costs

It can be costly to move a park model home from the manufacturer to its intended site. Most park model homes are considered to be over-sized loads, which means you need a permit and an escort for transportation. The house also must be anchored and stabilized on arrival, again based on local requirements, and may require concrete blocks, RV jacks, or hurricane ties.

Utility Hookups and Site Prep

Buyers need to prepare the site on which park model housing will be located by installing all utilities hookup: electrical service, water and sewer lines, etc. Park Model Homes generally require a 100 amp electric hookup, garden hose water connection, and a 3-inch sewer discharge. With those utilities can come an addition of several thousand dollars on the cost.

Maintenance and Insurance

A park model home is generally a good choice as they are easier to maintain than traditional homes. Buyers should anticipate the costs of common maintenance like cleaning, new paint jobs, and fixing broken items. Also, getting insurance for RV loans is crucial, and this depend on the price of your home as well as in what state or location you will park it.

Selecting the Most Suitable Lender for Park Model Homes

Choosing the right lender to finance a park model home is also key for obtaining reasonable loan terms. Buyers will want to focus on lenders who specialize in RV or park model home financing, as they are more familiar with the market and can even help you shop for a new unit. Look into the interest rates, loan terms, fees, and customer service of any lenders you are considering for a personal loan. One lender may be more flexible on down payments and loan lengths. Another might offer one-on-one service for buyers to walk them through the financing process.

Conclusion

When you finance a park model home, there are some things to consider because traditional home loans usually do not apply. Buyers can fund their park model homes in a variety of ways, including through personal loans, RV loans, or even home equity loans. You also need to account for delivery, setup, utilities, and maintenance, as well as the cost of financing. However, those who read the financing landscape and choose a lender mindfully can enjoy all of the benefits that come with park model homes without compromising on their finances.

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