FHA Refinance Loans and Manufactured Housing

Sometimes borrowers purchase manufactured housing with a conventional loan and later decide they want to refinance in order to get to a lower mortgage loan rate. With rates at lows we haven’t seen in some time (at the time of this writing) there doesn’t seem to be a better time to explore home loan refinance options. Rates are low in the summer of 2014, but there’s no guarantee they will stay this low or for how long.

So refinancing now seems to be a good idea for many, but if you are trying to refinance a conventional loan on manufactured housing or a mobile home, it only makes sense to explore FHA refinance loan options--after all, FHA mortgage loan rates are lower than many conventional loans and may have more forgiving terms for borrowers with credit scores that aren’t as good as they could be.

Does the FHA permit conventional-to-FHA refinancing? Does it permit such refinancing for mobile homes?

The answer depends on two things. The FHA definitely permits the refinancing of conventional mortgages with an FHA home loan. There’s no question about that--cash out refinancing under the FHA program is permitted, and no-cash out (non-streamline) refinancing is also available from participating lenders.

But when it comes to refinancing a manufactured home or mobile home, there is one very important restriction from the FHA borrowers need to keep in mind. FHA refinancing loans on manufactured or mobile homes is only permitted on homes classified as “real property”, meaning they are recognized as real estate, taxed as real estate, and are secured to a permanent foundation.

The foundation issue is non-negotiable. A mobile or manufactured home that is not permanently anchored or affixed to a foundation cannot be classified as real property, and therefore is ineligible for an FHA refinance loan.

These rules also apply to new purchase FHA loans for manufactured housing, too. No mobile home or manufactured home can get an FHA insured loan unless it will be anchored to a permanent, approved foundation. Ask your loan officer about this requirement and how it may affect your FHA loan application.

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