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