Financing Glossary

Here is a glossary of terms related to financing for various types of Manufactured Homes and Accessory Dwelling Units (ADUs):

Financing for Manufactured Homes:

1. Chattel Loan: A loan secured only by the manufactured home itself, not the land it sits on. It is commonly used when the home is located in a rented or leased lot within a manufactured home community.

2. Land-Home Loan: Also known as a "Manufactured Home on Land Loan," this type of financing includes both the manufactured home and the land it is situated on as collateral.

3. FHA Title I Loan: A Federal Housing Administration (FHA) insured loan specifically designed for financing the purchase or refinance of manufactured homes.

4. VA Loan: A loan guaranteed by the U.S. Department of Veterans Affairs (VA) that allows eligible veterans to obtain financing for the purchase of a manufactured home.

5. USDA Loan: A loan program offered by the U.S. Department of Agriculture (USDA) that provides financing for low and moderate-income borrowers in rural areas to buy manufactured homes.

6. Fixed-Rate Mortgage: A mortgage with a fixed interest rate throughout the loan term, providing predictable and stable monthly payments.

7. Adjustable-Rate Mortgage (ARM): A mortgage with an interest rate that can change periodically, typically after an initial fixed-rate period.

8. Private Mortgage Insurance (PMI): Insurance required for some conventional loans when the borrower puts less than 20% down payment on the manufactured home.

9. Underwriting: The process by which a lender evaluates the borrower's creditworthiness and determines if they qualify for the loan.

10. Loan-to-Value (LTV) Ratio: The ratio of the loan amount to the appraised value or purchase price of the manufactured home, expressed as a percentage.

Financing for ADUs:

1. Home Equity Loan: A loan that allows homeowners to borrow against the equity in their primary residence to fund the construction of an ADU.

2. Home Equity Line of Credit (HELOC): A line of credit that homeowners can draw from as needed, using their primary residence's equity to finance the ADU.

3. Construction Loan: A short-term loan used to fund the construction of the ADU, which is usually refinanced into a long-term mortgage once the construction is complete.

4. Refinance: The process of replacing an existing mortgage with a new one to take advantage of better terms or to tap into home equity for ADU financing.

5. Second Mortgage: A subordinate mortgage taken out on a property that already has an existing mortgage, often used to finance an ADU.

6. Bridge Loan: A short-term loan that provides temporary financing until permanent financing, such as a home equity loan, can be obtained for the ADU.

7. Payment Schedule: The agreed-upon plan outlining the repayment of the ADU loan, including the frequency and amount of payments.

8. Title Insurance: Insurance that protects the homeowner and lender against any disputes or issues with the title ownership of the property.

9. Cost Breakdown: A detailed breakdown of the expenses involved in constructing the ADU, including labor, materials, permits, and other associated costs.

10. Appraisal: The process of determining the value of the property to assess its worth for the purposes of securing a loan.

Please note that the availability of these financing options may vary based on location, lender, and individual financial circumstances. It's essential to consult with a qualified financial advisor or mortgage lender to determine the best financing option for your specific needs. Apply today to get started!