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Advice Needed, Moving Manufactured Home to acreage

Question: Here’s our situation:

We live in Idaho (Nampa). Back in 1996 my wife purchased a 26 X 40 3-bedroom manufactured home and we put it in a new park. (We were renting a duplex at the time and this seemed like a positive step.) Payments are $390/Mo, plus $220 space rent. After seven years, we have hardly paid anything but interest. Meanwhile, the economy is shot and this once fully-occupied park is now full of vacant lots, abandoned homes and repos galore. Bottom line, there is no way we can sell this house since we need $36K to get out from under it and these repos around us are going for $25-$29K. Meanwhile, the neighborhood is gone to hell (drugs, wayward youths, vandalism, etc) and we want to get us and our two teenagers away from here. Besides, we have acquired a boat, motorhome and a shop full of tools and we have run out of space!. I want a shop to work in and a place to put all my “stuff”.

To try and improve our situation, we are looking to purchase some land with the idea of moving the house onto it with a foundation and adding a garage. We have found a 5.3-acre parcel with a well, power and septic already in. This acreage is in a growing community and there are no CC&R’s or zoning issues. My thought is that in several years, as growth continues outward, we could split off some of this property or maybe build some spec homes (I have a lifetime of construction experience and lots of tools). The asking price for the land is $56,900 but we are considering offering $52K. We owe $36.7K on the house. It will cost another $10K for moving the house and foundation/hookup work. So, we are looking to borrow in the neighborhood of $100-$120K. We would like to do this all in one mortgage package, but the owner has expressed a willingness to carry all or part of the land price (likely with a substantial down which we don’t have). A breakdown looks like this:

$56.9K Property, 5.3 acres $36.5K Owed on Manuf Home $ 5.0K Moving $ 5.0K Foundation and setup $ 5.0K Down payment $ ?? Closing costs, misc

So far the best we seem to be able to find is 5% down with a lot of closing costs attached. The mortgage Broker we talked to yesterday wants $500 for appraisal, $100 title search and $20 Credit check, all non-refundable if we do not qualify. This seems wrong to me.

My wife has good credit, we qualified a few years ago based on her income for $135K, so our main obstacle is coming up with down, closing costs, etc. It seems there are programs out there for zero-down, grants for down-payment, 125% financing, etc., but as soon as we say “manufactured home” doors start slamming shut! The banks are saying they won’t even consider moving a MH because of the damage they claim is caused by moving one. Most of these deals are for first-time buyers for site-built on subdivision lots, it seems. Whatever. The problem is, I don’t have good credit due to child-support arrears from a previous marriage. I have been voluntarily giving 45% of my income for the past six or seven years to take care of this, but no lender is willing to look at my credit. I do have a couple of credit cards now, so my situation is improving but I still have a $140K black eye (at credit card interest rates) so I doubt I’ll ever get it paid off. I have been at the same job (state government) for the past 9 years now and have no intention of going anywhere.

I guess this seems long-winded, but I’ve been lurking here for a while now and wanted to provide as much detail as possible. Any help or suggestions would be greatly appreciated.

Answer: Things vary by area, but these seem in line to what I am used to, espeically since you are getting them at retail rather than as a high volume investor. I typically see appraisals come in at $350, credit checks at $40 to $55, and title search is usually done as part of title insurance, and that can run several hundred dollars. A manufactured home is an object that goes down in value over time, while real property is not considered to be an object, and real property usually either holds its value or goes up over time. You typically do not get mortgages on manufactured homes, rather, there are all kinds of specialized lending programs just for them. They typically have higher down payments and interest rates because they are designed for sub-prime credit and they have a high rate of default. Even if you had great credit, you are in a crowd that has a less than stellar track record. What the hell is this? A $140K “black eye”? I don’t follow you here, but if you are deep in credit card debt, you are likely only going to be a boat anchor on any deal that you do. You might have to remove yourself from the process, and try to qualify just on your wife’s credit, or go for a no-doc loan (but that requires 30% to 40% down, so you are screwed there, too). The only plan I can think of is the following:

1) check with your current lender and make sure you can move your unit. Make sure that it isn’t prohibited by your contract.

2) buy the land, and take the owner carry-back financing.

3) build the foundation & put in the utilities, but do it on a pay as you go basis using your wife’s income. At $135K, her paychecks are at least $3000 every other week, so you should be able to do this pretty quickly.

4) save up the money for the move.

5) move the house and get set up.

6) now that you have essentially converted it into real property, go for the house mortgage. If you get it, life is good. If not, you are no worse off than before you moved.

One final point…given your near-bankruptcy financial condition, I think that the land that you are looking at is too expensive for you. Rather than spending more for the land than what the house is worth, you should be looking 5 or 6 miles out of town for a 1/2 acre parcel, and pay $10K or $15K for it. You cannot afford $60 for a lot.

A second final point, given that your wife is in the top 2% of all income earners, how come you are living like vagabons in a trailer park? Where does all the money go? Income is not your problem, rather, you have spending issues. Given that kind of money, you should be saving at least $1000 a month for retirement and another $1000 a month for yourself, not to mention that you have teenage kids who are coming up on college in a few years. Your real battle is getting your spending under control. Once you do that, everything else will fall in place.

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