You can buy mobile homes for much less than stick-built houses in most areas of the country. Despite the common prejudice against them, mobile homes are the cheap housing choice of millions. While the advantages are not always obvious, they are real.
Buy Mobile Homes To Build Equity
One of the advantages is fast equity building. The myth about mobile homes depreciating is only half true. In parks, they generally go down in value over time. Buy mobile homes on land, though, and they’ll usually go up in value.
For example, a house with a $100,000, 6%, 30-year mortgage loan gives you a payment of $599.60. $500 of the first payment will go to interest, $99.60 to the principal. You built equity of $99.60 (We’ll ignore appreciation for the moment).
A mobile home on land, with a $30,000, 8%, 10-year mortgage gives you a payment of $363.99. The higher interest rate is normal with mobiles. The shorter-term is normal too, so you’ll own the home free-and-clear in 10 years instead of 30. In the first month, $200 will go to interest, meaning $163.99 goes to the principal. You built more equity in this scenario.
A mobile home on land might appreciate more slowly than a “regular” house, but faster loan pay-down probably may cover this factor. Now, if you also chose to bank the difference in payments ($235.61 per month), you’d definitely be better off financially with the mobile home versus the more expensive home (Except during times of fast appreciation).
You can do what you like with the home when you own the land.
Mobiles are cheap to maintain. Windows, plumbing, and doors are all cheaper than a “regular” house.
Property taxes, because they’re based on value, cost less. Insurance is less because you’re insuring less value. Just be sure you can get insurance before you buy it. Some old mobiles may be uninsurable in some areas.
Why buy mobile homes? The advantages are clear for young people starting out, who may have no other options. It may also be your better option when you consider the lower price, the simpler, cheaper maintenance, lower monthly payments, low property taxes, lower insurance costs, and faster equity build-up. The question then turns out to be, why not buy mobile homes?