Financing Spring, TX / The Woodlands, TX

[Travis Glenn]

Good Morning All,

I'm seeking some direction from investors living in The Woodlands area. I recently put in an offer in on a manufactured home in Conroe, TX. After doing so, I contacted my bank to discuss financing for the property as originally I was going to do a conventional loan and live in the house. My loan officer informed me that, generally speaking, big banks don't like manufactured housing and that instead of a 20% down, 3.75% interest loan, I would be required to have a 25%, 7.75% interest loan. This significantly effects my bottom line, not to the point of the house no longer being a good deal, but it certainly puts it much closer to that. Can anyone recommend a bank or credit union in this area that would have more favorable financing on a manufactured house? At minimum a better interest rate? Any advice or recommendations are appreciated. Thanks ahead of time!

[David Hines]

I think part of the reasoning is that when banks are making a loan, they know that a typical single family residence is an asset that has the strong chance of appreciating in value. They are then protected from risk of losses in the event of foreclosure by the end underlying asset's value. In the case of a manufactured home, it is closer to personal property and will only drop in value as it deteriorates. Therefore, they have to protect against the risk of foreclosure with higher interest rates. If at all possible, you may want to consider looking at single family residences. They make much stronger investments in almost every category.