Mobile homes can be bought for a cheaper rate than stick-built houses in quite a few places in the country. Mobile homes are known to be the easy-on-the-pocket housing choice of so many people across the board and all this despite the common prejudice that tends to haunt it. The advantages are real but not immediately obvious. The main advantages are fast equity building. It is a half truth that mobile homes depreciate over a period of time. This is true if they are in parks but mobile homes on land generally go up in value.
Buying a mobile home with real estate very often finds it doubling in value in a bit more than 10 years. Of course the house might be in need of some maintenance but that holds true for all houses at some point of time. What does happen is that the value of the land goes up and the mortgage payments are lower than that of stick-built houses.
Because of the seven year amortization, shorter than normal and the lower equity amount, you find that you build up equity quite fast. For example a house with a $100,000, 6%, 30-year mortgage loan will entail a payment of $599.60. Now $500 of the very first payment will go towards interest and $99.60 will go to the principal amount. You find that you have built equity of $99.
60. A mobile home on land, with a $30,000, 8%, 10-year mortgage will mean a payment of about $363.99 only. With mobile homes, a higher rate of interest is normal as is the shorter term too, and this means you have free and clear ownership of the home in 10 years instead of the usual 30.
Here in the first month, $200 will go towards interest, which means $163.99 goes to the principal amount. So you see just how much more equity you are building.
A faster loan pay out may be due to the fact that mobile homes on land may appreciate more slowly than a regular house. Banking the difference in payments of about $235.61 each month will give you a better financial stability with the mobile home rather than the expensive home. By paying less each month you can build more equity. Since simple math is not part of the licensing agreement, your real estate agent will not tell you these little bits of important information and maybe you should not expect him to.
When you own land you can make whatever changes, modifications to your home and use the place according to your requirements. By renting rooms, you can do well money wise. This is a major advantage when you own the land as well as the home.
Mobile homes are cheap to maintain too. Things like windows, plumbing, doors, etc are all that much cheaper. So are the fitting costs for plumbing and electricity. Did you know that because property taxes are based on value, it is less on mobile homes and the insurance is lower, too? But ensure that you are eligible for insurance before you make any purchase as some areas don't insure old mobile homes. On the other hand it would not make much sense to buy a mobile home if the prices for houses were as low in the same area.
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