Many people turn to personal loans for down payment on a mobile home, but this may not be an ideal situation if there are other options available. It may be better to find the funds for a down payment elsewhere, or to utilize a loan program which does not require a down payment.
Personal Loans Explained
A personal loan is usually from one of two sources:
- A personal loan from a lender such as a bank or credit union is dubbed a personal loan because it is an unsecured loan which is not backed by some form of collateral. Personal loans can be used for any reason, but the interest rates on these types of loan are generally rather high compared to other types of loans. The amortization of personal loans varies, with the interest rate usually lower for loans with shorter terms.
- A personal loan from another person - whether it's a friend, family member, or some other benevolent person willing to loan you money for a down payment - may or may not include interest payments, and might not have a formal repayment structure. The terms of this loan depend on the agreement between you and the person lending the money for the down payment.
Mortgage Lenders Want Full Disclosure
When you apply for your mobile home mortgage the lender is not only going to scrutinize your credit report, but you will also be expected to explain any sources of income other than your usual paycheck. For example, if your parents loan you the money for a down payment on a mobile home and you deposit that money into your savings account, your lender is going to want to know exactly where the money came from. The lender will also ask to see documentation explaining the repayment plan set up for the loan.
It is generally not sufficient to simply tell your lender that your parents have told you to repay them whenever you can. Personal loans for down payments on mobile homes are considered financial obligations and affect your debt-to-income ratio, no matter where the loan comes from.
Personal Loans From Lenders
When you apply for a personal loan an inquiry appears on your credit report. This means that even if you don't want your mortgage lender to know that you are applying for a personal loan to cover the down payment, it will probably still be discovered whether or not the account has even shown up on your credit report at the point you apply for a mobile home mortgage. It is better to be upfront when applying for the mobile home loan instead of attempting to covertly borrow the down payment funds.
Find Personal Loans for Down Payment on Mobile Home
You can find suitable personal loans from a variety of sources:
- The bank or credit union you already do business with
- Another financial institution offering personal loans
- Online using a search engine or bank comparison website.
Take care when applying for a loan online with a lender you are not familiar with. Check with the Better Business Bureau to make sure you aren't handing your personal information over to a hacker posing as a lender.
Down Payment Alternatives
If you have trouble scraping together the funds for a sufficient down payment on a mobile home you will be pleased to find out that there are down payment assistance programs available. Some of these programs are dependent upon your income level, and others are only available to people who fall within certain eligibility categories.
- The VA offers loan guarantees to veterans which allow for no down payment.
- FHA offers various down payment assistance programs to:
- Low income applicants
- Buyers in certain locations
- Certain occupations (teachers, firefighters, etc)
- Some lenders offer special financing to circumvent the need for a down payment.
Check with your lender to see if there are any programs available to help you avoid taking out a personal loan for a down payment on your mobile home purchase.