Considerations

During the mortgage loan process, there are many considerations to be made regarding home price, down payment amount, income level, and monthly payment amounts. These issues can be confusing and can lead to miscommunication between the buyer, the agent, and the broker. Calculations specifically are often difficult for customers to grasp, so clear this up, some of the most commonly used calculations for manufactured home mortgage loans are explained below.

Total Debt to Income Ratio (DTI)
For the broker and lender to accurately calculate what price point of home a buyer can afford according to their income, they must calculate the Debt-to-Income Ratio or DTI. It is used to determine what percentage of a buyer’s income each month goes to paying debts. To calculate the DTI, total up every monthly debt the buyer has, including estimated monthly payment and space rent amount. This includes credit card bills, student loans, any other loans, alimony and child support, car payments, and any other monthly expense. Now that you have your total monthly debts, divide that number by the buyer’s total monthly income. Then, multiply by 100 to get the DTI. It will fall between 0-100 and is a percentage.

Here’s an example:

Monthly Income: $5,000

Debts:

Next, take the monthly debts ($1,600) and divide it by the monthly income ($5,000).

$1,600 ÷ $5,000 = 0.32

Now, multiply by 100 to get the DTI.

0.32 × 100 = 32%

Therefore, this customer’s debt-to-income ratio is 32%.

Housing Ratio

The housing ratio is similar to the debt-to-income ratio in many ways. It is calculated using the same steps (different numbers, however), and is also used by the broker and lender to determine what sales price a buyer can afford with their monthly income. It is calculated using the estimated monthly payment and space rent amounts divided by the monthly income amount.

Here’s an example:
Using the figures from the last example, this is how to calculate housing ratio.

Monthly Income: $5,000

Housing Debts:

Next, take the monthly housing debts ($1,250) and divide it by the monthly income ($5,000).

$1,250 ÷ $5,000 = 0.25

Now, multiply by 100 to get the DTI.

0.25 × 100 = 25%

Therefore, this customer’s housing ratio is 25%.

Space Rent

Space rent is an important consideration to make when choosing your manufactured home. It does matter how much the space rent of a home is because it is factored into both your total debt-to-income ratio as well as your housing ratio. If after calculating your total debt-to-income ratio and it is too high, try considering a home in a park with a lower space rent. This can help to reduce the DTI and can bring your ratios (both DTI and housing) into the acceptable ranges to be approved by the lender.

Homeowners’ Association Dues (HOA)

Sometimes a mobile home park will have what is called Homeowners’ Association dues. These dues pay for pools, spas, communal areas (clubhouse, meeting rooms, etc), and landscaping within the community. That being said, HOA is something to consider when choosing your park, because it is a monthly bill that you must be able to afford with your monthly income. Not all mobile home parks have an HOA, so if that is something you do not want, it is easily avoidable.

Broker Fee

The broker’s fee is the fee you pay us, the broker. The percentage of the sales price that is paid to the broker is dependent on the terms of your loan.

Insurance

One year insurance showing year, make, model, size and complete serial number of home is required. The insurance binder needs lender to show as loss payee. Santiago Financial, Inc. has manufactured home insurance in-house for competitive rates. However, the buyer is not required to obtain insurance through Santiago Financial, Inc. but is required by law to obtain a one year policy on the home purchased. If the buyer chooses to proceed with the insurance Santiago Financial, Inc. offers, they have the option to finance the first year’s premium (depending on lender approval). Triad and CU will not finance closing costs normally.