6 Questions When Choosing a Manufactured Home Equity Loan

If you find yourself in a situation where you need some extra money for unexpected expenses it might be worth looking into getting a manufactured home equity loan. Home improvements, paying off high interest credit card debt, or paying for your kids college tuition are all reasons to tap into your home’s equity. But before doing so consider these 6 questions first.

1. What kind of loan will work best? A home equity loan or a home equity line of credit? When interest rates are low a straight loan is probably the best idea. This allows you to borrow the full amount at a fixed rate. It also allows you to budget for the fixed monthly payments.

A line of credit may work better with higher interest rates. In this case the loan is set up much like a bank account, allowing you to only access what money you need by writing a check or withdrawing the money. You only have to pay back what you have withdrawn along with any interest.

2. What, if any, restrictions are there on how the money can be used? While restrictions are rare it is a good idea to ask your loan officer if there are any because you don’t want to be penalized with extra fees.

3. How can I find an interest rate that works for me? That’s simple, shop around. There enough lending institutions out there fighting for your business that you are bound to find one that will meet your needs. Be sure to ask lots of questions and work with a company that you feel comfortable with. Ask about early payoff penalties and if they charge an application fee.

4. What contract terms work best for your situation? A five, ten, or fifteen year term? This will depend on your budget and how much you are willing to spend on the monthly payments. There is a trade off here. The longer the term the lower the payments but the more interest you will pay over the life of the loan.

5. Are there any tax benefits with a manufactured home equity loan? This type of loan is treated much like a mortgage when it comes to tax benefits. The interest is deductible in most cases but it is a good idea to consult with a tax professional before closing on the loan.

6. How lengthy is the application process and when will I know if I’ve been approved? The fact is applying for home equity loans has gotten easier and easier thanks to the internet. Almost all lenders have some sort of web presence and online application process that makes getting pre-approved in a few hours a real possibility. It will normally take 5 to 10 days for final approval to take place but there’s a good chance you could have a check in your hand in as little as two weeks.

A manufactured home equity loan is a good way to get that extra cash you need. Do your research, shop around for the best deal, and make sure the terms comfortably fit your budget.