Expert: Dick Dennis - 12/7/2009

Question
Hello,  My husband and I have a mobile home that we own outright, but we have been renting space in a park.  We are hoping to purchase land to move it to.  We have found a 1.5 acre lot in Visalia, Ca. that has an old 1920's bungalow on it that we are concerned won't pass inspection to obtain a conventional loan.  The owner is willing to do a lease to purchase option so that we can get the mobile home on first and then apply for a conventional loan.  We are wondering, will having the mobile home on allow us to apply for a conventional loan?  Or, do we need to apply for the loan first, going with the pre-existing home and then move our mobile home on?  Also, if we start with a lease, then will the purchase be considered a refinance, or a new purchase?

Answer
First of all, Leanne, you need to own the land on which you intend to put your mobile home before you get a loan. The bank will not lend until you own that land, or you owe a small enough amount that would allow them to put a loan on it that would include the mobile home. So, a lease to purchase will hot help you get that loan on the land. And if you find a piece of land on which there is no previous building on it, you need to "perk" (short for percolate) the land to see if it is suitable for a septic tank for sewage purposes if there is no sewer line nearby. If there is a sewer line nearby, then you must pay for connecting your home to it.

The land with the older bungalow probably has a sewer line connection. If not, it certainly has a septic tank to which the house is connected. You would need to connect the mobile home to it as well. So, if you do a lease to purchase option on that land, you might be able to connect the mobile home to the existing sewer system (whatever it is). But you would not be able to get a loan for your mobile home until you own the land as I noted above. A lease is never considered a refinance or loan of any kind. You would have to buy the land and make payments on it until you either pay it off or owe a smaller amount allowing the bank to refinance the whole parcel with the MH on.

My guess, however, is that the rent you are paying right now in the mobile park is less than what you would have to pay for rent on that 1.5 acres. I do wish you well.

Dick Dennis
CA Broker 00349415
dixiedee13@aol.com