The Advantages of Buying a Manufactured Home: Exploring the Actual Cost

The dream of homeownership is one that many of us aspire to achieve. However, this dream can often feel out of reach with skyrocketing real estate prices and increasing mortgage rates in recent years. Manufactured homes have gained popularity as an affordable alternative. Despite having slightly higher mortgage rates than traditional single-family homes, the actual cost of owning a manufactured home remains significantly lower. Here we will take a look at the advantages of buying a manufactured home and shed light on how the interest rates, while slightly higher, do not play as significant a role as one might think.

Emilio Allen, the Vice President of Capital Markets at Roots Management Group helps guide us through the options and what the numbers really mean when you look at the bigger picture.

1. Affordability

One of the most compelling advantages of purchasing a manufactured home is its affordability. Manufactured homes, on average, cost considerably less upfront than traditional single-family homes. While a single-family home can come with a hefty price tag of around $416,000 or more, a manufactured home typically costs around $75,000. This significant cost difference is what makes manufactured homes an attractive option for many homebuyers, especially those on a budget.

2. Lower Down Payment

Manufactured homes often require a lower down payment compared to traditional homes. With a lower initial investment, buyers can get their foot in the door of homeownership without having to save up a substantial down payment. This makes it more accessible for first-time homebuyers or individuals with limited savings.

3. Faster Construction and Move-In

Manufactured homes are constructed in a factory and assembled on-site, which typically results in a faster construction timeline. Unlike traditional homes, which may take several months or even years to build, manufactured homes can be ready for occupancy in weeks. This quick turnaround allows homeowners to move in sooner and enjoy their new living space without prolonged delays.

4. Energy Efficiency

Modern manufactured homes are built to be energy-efficient, meeting or exceeding stringent building codes and energy standards. They often include features like energy-efficient appliances, insulation, and windows, which can translate into lower utility bills and reduced long-term costs. Take a look at this blog for more information.

Understanding the Interest Rate Difference

It's true that manufactured home loans tend to have slightly higher interest rates compared to traditional single-family home loans. For instance, the average interest rate for manufactured home

loans may hover around 10.5%, while the rate for single-family homes might be closer to 7.5%. However, it's essential to consider the bigger picture.

When you look at these numbers, the monthly mortgage payment for a single-family home is significantly higher than that of a manufactured home. While the interest rate on the manufactured home loan is higher, the lower overall cost of the home results in substantially lower monthly payments. This means that despite the interest rate difference, the financial burden of owning a manufactured home remains much lighter.

Buying a manufactured home has many advantages, primarily driven by its affordability, lower initial investment, faster construction, and energy efficiency. While interest rates on manufactured home loans may be slightly higher than traditional single-family homes, the lower overall cost of a manufactured home results in significantly lower monthly mortgage payments. Ultimately, the actual cost of homeownership is determined by a combination of factors, and when all factors are considered, manufactured homes often emerge as a wise and cost-effective choice for those looking to fulfill their dream of owning a home.

If you would like to explore additional resources, we urge you to see what the Department of Housing and Urban Development (HUD) has to say about buying a home you can CLICK HERE