I Know About De-Titling and Want a Quick Answer!
A Basic step in Many states to qualifying your Manufactured Home as a Real Property is De-Titling. By de-titling your manufactured home you May Qualify for a Mortgage or Refinance.
De-Titling A Manufactured Home*
De-Titling a
Manufactured Home Requires Land. When
you de-title your manufactured home you are attaching the manufactured home to
the land as a ‘Land Improvement’ and the two assume a legal definition of ‘one’
Real Property.
A vital
component of great concern with de-titling is to realize that the manufactured home becomes a subject of
the land, and therefore, the ‘land owner’ will now own the manufactured
home, and not necessarily, the de-tiling
person; therefore, if you choose to de-title your manufactured home, be certain
that you have legally secured the land upon which you choose to de-title the
manufactured home. Note that each state has different requirements for the de-titling
process, know your state, specific county and/or city, and be certain of your rights
and obligations in your area.
The Purpose
and Scope of De-Titling your manufactured home is to reap the benefits of de-titling.
You will face some advantages and disadvantages from de-titling, but what are
they, and whether the de-titling advantage outweighs the disadvantage is a
choice you must determine based upon your specific needs.
One disadvantage
of de-titling is taxation. The manufactured home is a subject of the DMV in
most states, considering state and county laws, and is therefore taxed like an automobile.
In contrast, Land taxation falls under ‘real property’ taxes. When a manufactured
home is de-titled the DMV no longer taxes the manufactured home, but the land taxes
will increase from the resulting de-titling, due to ‘property improvements’
upon the land the manufactured home is now attached with.
Many people choose to de-title a manufactured home to reap the advantage of owning real property which is more likely qualified for refinancing with lower interest rates, versus owning both land, and then a manufactured home (which more closely resembles an automobile or RV, which unlike Real Estate, tends to depreciate in value over time). Many banks simply won’t mortgage or loan on a titled manufactured home, and virtually none will if the manufactured home has no land attachment. The banking institutions which will mortgage a manufactured home-with land attachment, are likely to consider the exercise a ‘high risk’ and will therefore reflect that risk with an inflated interest rate, meaning the total cost of your loan is greatly increased. This increase in the cost of the loan results in a total cost to value of your home which exceeds the real value of the home. This state of a loan or mortgage is sometimes referred to as being ‘upside down’; meaning you owe more than your homes fair value.
*This section is not intended to be a legal advice regarding de-titling, or to serve as any exhaustive list of the concerns and legalities of the subject. Check with a professional agent of each respective subject area of mention within this section to assure you are proceeding in proper and legal form, and that you are adequately informed of the advantages and disadvantages of De-Titling in your specific area.