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What is a Chattel Mortgage?
Dated: December 12 2022
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What exactly is a Chattel Dwelling Loan?
This specific type of loan is used to purchase an item of movable personal property. Manufactured homes or a piece of construction equipment would fall under this category. The property (Chattel) secures the loan and the lender holds ownership interested in it. This specific type of mortgage differs from a regular mortgage in which the loan is secured by a lien on a stationary property, such as a huse or an office building.
Mobile/ Manufactured homes where the homeowner buys the residence but not the land that the mobile/manufactured home sits on, are often financed with chattel mortgages.
A Chattel Mortgage is often used to purchase heavy business equipment such as bulldozers, forklifts, farm equipment, boats or airplanes.
A Chattel loan is often more expensive than a traditional mortgage, with higher interest rates, and have fewer consumer protections. The tend to have shorter terms than a regular mortgage as well and usually have to be paid back more quickly which means the monthly payment can be higher.
The difference between a chattel mortgage and a traditional mortgage is that the lender owns the property until it has been paid off in full. With a traditional mortgage the lender isn't the owner of the property but has a lien on the property allowing them to take possession of it in the event of a default, or non payment. Ownership transfers to the buyer at the end of the mortgage term with a chattel loan, assuming all payments have been made.
In Florida chattel loans must be registered in a public registry so third parties can be aware of them before entering into financing agreements with potential borrowers who want to put the property up as security for another loan.
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All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. Listing(s) information is provided for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing.
Updated on May 12, 2024 7:03 PM UTC
