Have you been typing “floating homes in the Bay Area” into your search bar? There’s something whimsical and cozy about a house on the water. If you’ve been browsing the docks, don’t wait to call up a couple lenders for a chat about your options. In general, securing financing for a floating home isn’t always easy. Fewer lenders are willing to take on the additional risk. Credit unions and smaller local banks may be more likely to offer you a floating home mortgage. If you have your heart set on becoming part of a floating house community, here’s what you need to know about financing your dream.
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The Certificate of Title
One of the most critical factors you should consider is ownership of the floating home because it’s treated as personal property. When you purchase such a home, there won’t be records at the Department of Housing. Instead, you will have a security agreement that states the lender is the legal owner of the floating home. The lender actually holds the Certificate of Title for the property. You, on the other hand, will be given a registration card. This shows that your lender owns the house until you finish paying off your debt. This is a bit different from a traditional mortgage.
20% of the Cost
Typically, all floating homes Bay Area lenders will only provide you with 80% of the amount needed to purchase the home. This means that you need to be able to cover at least 20% of the purchase price, but the amount may be higher depending on any additional costs you may incur.
Although most floating homes Bay Area lenders will offer a 7 year extendable period, the loan terms, including interest rates, are often adjusted depending on the market. If the market price increases, your interest terms will be increased, as well, along with your payment period. Failure to keep up with payments, even an increment, can lead to financial penalties.
A Third Party
Although the law doesn’t require you to work with an escrow company, your lender may insist on using a third party to handle the transaction. An escrow company that’s already familiar with floating home sales can make the process easier. So, make sure the company you hire has expertise in floating homes.
You’ll Still Pay Taxes
Even though you’re not considered the floating home’s legal owner, at least according to the official records, you’ll still be expected to pay property tax each year. The overall property value determines your yearly floating home property tax.
Bay Area Floating Homes
If you’re interested in floating homes in the Bay Area, contact us first at Bay Area Escrow. We can answer questions and help you through the loan process. Reach our office by calling (925) 831-9099, or fill out a quick contact form by clicking here.