Some Things You Should
Know About Financing You’ve decided to
take the plunge and purchase a manufactured home. Now we need to talk about the
basics of financing your new home. The basic procedures are:
1. Down Payment
The minimum down payment is 5%, 10% is better because that
will allow you to obtain a lower interest rate.
For example, 5% down will usually get an interest rate of
9.50%
while 10% down will get you 8.50%.
2. Terms
Terms mean how long you will actually finance the home you
are purchasing. You have the option to finance you home for a minimum of five years to a
maximum of 30 years.
The shorter the term, the less interest you pay. However, a
shorter term means higher monthly payments. So your payment needs to be calculated to fit
your budget.
Hall’s recommends that you finance no longer that 20 years -
it’ll save you big bucks.
For example, let’s say you bought a $40,000 home at
8.50%
on a 20-year note. Your monthly payment would be $347.13. Financed for 30 years, the
payment would be $307.57.
While the 30-year payment is $39.54 lower, you would save a
whopping $36,908.40 by going 20 years. Another advantage is you build equity quicker
and are in a better position to trade or sell sooner.
Before you panic, if you do chose 30-year financing, there is no
penalty for pre-paying. So, you could pay extra during the year and bring the principal
down with the same effect as the shorter term financing. |
Learn About
Interest Rates
Interest rates may be fixed or variable,
and there are many special programs which can reduce your inital payments. If you opt for
20-30 year financing you can purchase points (that can be financed) which will bring your
rate down as much as two full percentage points.
The more cash you are able to pay down, the lower your rate will
be.
For example:
5% down =
9.50%
10% down = 8.50%
15% down = 7.50%
20% down =6.75%
The 9.50% could be brought down to an actual
7.50% interest
rate with the point system lenders offer.
The better your credit, the lower rate you deserve, so don’t
be shy about asking for preferred rates if you have excellent credit. Both you and
your dealer should be concerned about getting the best financing possible on you new home
What sense does it make to argue over a few hundred dollars on
the price of a home, then never ask about financing options that could potentially save
you thousands of dollars? |
| And Just What Is My Best Payment?
The best payment is the highest
you can comfortably afford to pay. Remember, the higher the payment, the shorter
the term and the less interest you pay. Put things into perspective - a new home is
your most important and expensive possession. Why will people pay a combined payment of
$1,000 on cars and boats, but want $300 house payments?
Budget for the home your family deserves. A $500 payment today
will seem low five years from now. Many people mistakenly do not budget a high enough
house payment. If you tell yourself that you can only afford $300 a month, when you look
at a quality home you may think you can only afford the smallest home.
Compromise a bit on your payments, say to $350 per month, and
purchase a quality home. You and your family deserve it. |
