The Truth About Manufactured Homes: Basements, Insurance, and Titling

Host, Kristen Ambos: Hey everyone, and welcome to the Always on Point Podcast. Kristen Ambos here with Point Mortgage, and I am always ready and willing to share the newest and best information with you. If you have thought about a manufactured house, or wondered about the difference between a stick-built, modular or manufactured home, this is the podcast for you. This has been coming up a lot lately. We work with manufactured and modular homes, and there are a lot of them around the country. Wisconsin is no different. They can provide an affordable housing option, but there are also some stigmas and some important lending nuances. So let's start with the first question: What's the difference between a stick-built, modular and manufactured home? A stick-built home is exactly what you probably think. It is constructed at the property itself. Then there's modular. Modular and manufactured homes get confused quite often. A modular home has components built in a factory and then assembled and permanently constructed at the property. From a lending standpoint, modular homes are generally treated much more like traditional site-built homes. Then there are manufactured homes. You will commonly hear terms like single-wide and double-wide. A single-wide is transported to the property as one unit. It may be located on owned land or in a manufactured-home community where the homeowner leases the lot. Financing options can be different depending on whether the land is owned, how the property is classified and the loan program. A double-wide is typically transported in multiple sections and joined together at the property. Here is where people sometimes get confused. You can put a manufactured home on a full basement. You can pour a basement, place the manufactured home over it and walk directly from the house into that basement. That does not automatically convert the home into a stick-built or modular home. It is still a manufactured home because of how the original structure was constructed. Manufactured homes also use foundation and anchoring systems designed to permanently attach the home to the site. Depending on the property, loan program and available documentation, an engineering or foundation certification may be required to verify that the home meets applicable requirements. If structural modifications have been made, that can also become important. For example, maybe a deck has been attached directly to the structure. Maybe a garage was added. Maybe walls were removed or another addition was constructed. Those changes may require additional review because the lender needs to understand whether the manufactured home and foundation still meet the applicable requirements. That is why I always tell buyers and real estate agents: talk to the lender before you write the offer if you know you are dealing with a manufactured home. Find out what loan program the buyer may qualify for and what additional property documentation may be needed. Insurance is another consideration. Not every insurance carrier handles manufactured homes the same way, and the age and condition of the property can affect availability and pricing. So get an insurance quote early. That is good advice on almost any home today, but especially when you're dealing with a manufactured home. The sooner we understand the insurance cost, the sooner we can understand the complete monthly payment. Another important date is June 15, 1976. Federal manufactured-home construction and safety standards took effect on June 15, 1976. Homes built under the federal standards have HUD certification labeling. That documentation matters. On a manufactured home, you should be looking for the HUD certification labels on the exterior sections of the home and the manufacturer's data plate inside the property. The data plate includes important identifying information about the manufacturer and the home. If identifying information is missing, it can create additional work because the lender needs to be able to identify the home and confirm that it meets the applicable requirements. I've run into unusual cases during my career where identifying information could not easily be found. That can create a major financing problem. The other important piece is titling. A manufactured home may have been sitting on the same property for years and may even be assessed as part of the real estate, but that does not automatically mean the legal title status has been handled correctly. Assessment and legal title classification are different issues. For many mortgage programs, the manufactured home and land need to be legally classified as real property. That is why it is important to investigate title status early. If you're selling a manufactured home, you do not want to discover a title issue after you're already under contract and trying to close. The same goes for foundation documentation, HUD identification and insurance. The more you can verify before the transaction gets underway, the cleaner the transaction can be. I'm working with an agent right now who is listing a manufactured home. She reached out before listing because she wanted to understand what might be required. We connected her with the right professionals, started looking at the title situation and made sure the seller understood what could be needed. That is exactly what you want to do. It is when nobody asks questions until the last minute that you can suddenly discover you need another inspection, additional foundation work, title documentation or something else that pushes the closing back. Let's do as much as possible upfront. And if you're a real estate agent who is listing a manufactured property, I want to be a resource for you. I may or may not ultimately do the buyer's financing. That is not the point. The point is helping you understand the lending side so you can prepare your seller and your buyer. There are so many levels and dynamics to mortgage lending that none of us knows everything about every product. I've been doing this for about 25 years, and I continue to learn. Being willing to ask the right questions and work together is what creates a better transaction. So here are the big takeaways. A stick-built home is constructed at the property. A modular home has factory-built components but is assembled as a modular structure at the property and is generally treated differently from HUD-code manufactured housing. A double-wide manufactured home is transported to the property in multiple sections and permanently installed there. A single-wide is transported as one section, and financing can differ considerably depending on the property, land ownership and loan program. If you're buying or selling a manufactured home, start by identifying exactly what kind of property it is. Then look at the financing program, foundation documentation, HUD identification, insurance and title classification. If you have questions, reach out. We're happy to help you understand what may be required. Thank you again for joining me for another episode of the Always on Point Podcast. You can find us on your favorite podcast platforms and on YouTube. Share this episode with someone who is considering buying, selling or listing a manufactured home. The more we understand before a transaction begins, the better prepared everyone can be. We look forward to seeing you next week.