Posted on: 15th Jul, 2009 09:22 am
I need some advice and I keep getting directed to your website.
I live in Michigan and own a manufactured home in a manufactured home community. So basically, a trailer in a park. I bought the home 10 years ago and haven’t been late on a single payment (to anyone, ever). We have two problems. We’ve quickly outgrown this home. And I’ve not had any luck selling or even offering a short-sale. Now my brother has shown interest in renting it – if we can get another home.
Here are some facts:
My “mortgage†doesn’t show up as a mortgage on my small free home credit report, it shows up as an installment loan. The paperwork I filled out doesn’t have a single mention of “mortgage†on it anywhere, and the deed actually resembles an automobile title.
My brother who is interested in renting a) can’t pay the full monthly payment to live here. With our mortgage and lot rent we’re paying about $900. B) Even if he could afford the full thing, he’s not very reliable. I could probably fully expect the payment to go unmade after a month or two (3 tops!).
I am fully willing to accept that there are consequences of the trailer going back to the lender. I’m just trying to figure out what that does to us if (when) it happens. By that I mean, how this could affect my new home, my 401k, my paycheck (garnishment?), etc.
We are currently attempting to secure a pre-approval, but the above questions linger in our minds. Even if we are able to get pre-approved, what could possibly (or likely to) happen?
Thank you very much.
I live in Michigan and own a manufactured home in a manufactured home community. So basically, a trailer in a park. I bought the home 10 years ago and haven’t been late on a single payment (to anyone, ever). We have two problems. We’ve quickly outgrown this home. And I’ve not had any luck selling or even offering a short-sale. Now my brother has shown interest in renting it – if we can get another home.
Here are some facts:
My “mortgage†doesn’t show up as a mortgage on my small free home credit report, it shows up as an installment loan. The paperwork I filled out doesn’t have a single mention of “mortgage†on it anywhere, and the deed actually resembles an automobile title.
My brother who is interested in renting a) can’t pay the full monthly payment to live here. With our mortgage and lot rent we’re paying about $900. B) Even if he could afford the full thing, he’s not very reliable. I could probably fully expect the payment to go unmade after a month or two (3 tops!).
I am fully willing to accept that there are consequences of the trailer going back to the lender. I’m just trying to figure out what that does to us if (when) it happens. By that I mean, how this could affect my new home, my 401k, my paycheck (garnishment?), etc.
We are currently attempting to secure a pre-approval, but the above questions linger in our minds. Even if we are able to get pre-approved, what could possibly (or likely to) happen?
Thank you very much.
Hi DC and welcome to the forum.
You are correct that the loan you have will show as an installment loan. A mortgage is for what is considered "real property"; ie. real estate. Since your home is on rented land, think of your manufactured home loan along the lines of a car loan as they are basically in the same category. Because the home still has a title similar to a vehicle title the loan would be an installment contract.
You are making the right first step in trying to be qualified for a mortgage on a new home prior to making any decisions. Your lender should be able to advise you of the consequences of your brother not being able to pay the full amount of the loan plus lot rent.
As for the ramifications of defaulting on the loan, I am not an attorney, nor am I licensed in your state, so I would be hesitatant to answer but it is possible for the lender in some states to obtain a judgment against a lienholder and garnish wages. You may want to seek a legal opinion on that aspect of your question.
You are correct that the loan you have will show as an installment loan. A mortgage is for what is considered "real property"; ie. real estate. Since your home is on rented land, think of your manufactured home loan along the lines of a car loan as they are basically in the same category. Because the home still has a title similar to a vehicle title the loan would be an installment contract.
You are making the right first step in trying to be qualified for a mortgage on a new home prior to making any decisions. Your lender should be able to advise you of the consequences of your brother not being able to pay the full amount of the loan plus lot rent.
As for the ramifications of defaulting on the loan, I am not an attorney, nor am I licensed in your state, so I would be hesitatant to answer but it is possible for the lender in some states to obtain a judgment against a lienholder and garnish wages. You may want to seek a legal opinion on that aspect of your question.
the only hazard i see in this scenario is the possibility that your brother can't make the payments. would you necessarily have to default in that event? could you continue to make those payments, continue to try to sell, find another tenant?
i'm not an advocate of defaulting on loans, so unless that were to become an absolute necessity, i'd say don't do it.
i'm not an advocate of defaulting on loans, so unless that were to become an absolute necessity, i'd say don't do it.
