People purchase properties for various reasons.\u00a0 Some people need a first home, or a new home.\u00a0 Some want a vacation house.\u00a0 Others live part time in different places.\u00a0 Think of the so-called \u201csnow birds\u201d for an example of this, where they live summers in the north and winters in the south.\u00a0 No matter the intended use of the property, purchasers can find loans.\u00a0 But depending on the intended use, the requirements of lenders may vary.<\/p>\n
Properties break down into three large categories: 1) primary homes; 2) second homes; and 3) investment properties.\u00a0 Each carries various risks and therefore lenders put various requirements on them.<\/p>\n
Primary Homes<\/em><\/p>\n Primary homes (also known as primary residences) are just what they sound like \u2013 the home that the homeowner lives in.\u00a0 The homeowner must live there the majority of the time, and must not use it as a rental property.\u00a0 A loan granted on this type of property will likely be significantly lower priced than a loan granted on any other type of property, for reasons we will get into later.\u00a0 Lenders are also more likely to grant this type of loan, for the same reasons.<\/p>\n Loans approved as primary home loans generally require that the homeowner have the intention of either moving into the property (in the case of a purchase) or of remaining on the property (in the case of a refinance) at the time of the loan closing.\u00a0 If the homeowner knows that they will not be living in the property, they cannot assert to the bank that they will be, and they will not be obtain a primary home loan for the property. \u00a0In fact, at the time of closing, they will be required to certify that they intend to live on the property.<\/p>\n Second Homes<\/em><\/p>\n <\/em><\/p>\n Second homes is a somewhat nebulous category which includes seasonal homes and homes for people that, for example, live half the week in one location and half the week in another.\u00a0 This category is stuck between primary home loans and investment properties because though many people own multiple properties, they don\u2019t always own those properties for the purpose of making money off of them.<\/p>\n Investment Properties<\/em><\/p>\n <\/em><\/p>\n This is the second most common type of property, after primary homes.\u00a0 Investment properties are those which, for example, you would rent out to offset part or the entire purchase price.\u00a0 Whether you plan on actually making a profit or not, the property may be considered to be an investment property, depending on how you use it, and how much you use it personally.<\/p>\n Investment property loans are more expensive than primary home loans, and are more difficult to get.\u00a0 Why?\u00a0 Well, let\u2019s think about this logically.\u00a0 Let\u2019s say a homeowner is having trouble meeting all of their obligations.\u00a0 What are they going to stop paying first?\u00a0 The mortgage on the home they actually live in, or the property they see only a few times a year, if at all?\u00a0 The answer must be that they will do everything they can to retain their actual home, and will let the investment property go.\u00a0 This translates into investment property loans being given a higher risk rating than are primary home loans.\u00a0 Therefore, interest rates are higher.<\/p>\n Nothing requires you to be the occupant of a home.\u00a0 But if the owner will not be the occupant, they must inform the lender.\u00a0 The lender will determine whether they are still willing to lend on the property, and at what interest rate.\u00a0 A lender may also consider different factors in granting an investment property loan, such as the possibility of rental income.\u00a0 Under no circumstance should the owner misconstrue their intent with regards to the property.\u00a0 If they are caught doing this, it will only cause trouble down the line.\u00a0 This is not to say that just because a property is purchased as a primary home, it can only ever be used as one.\u00a0 However, at the time of the closing of the loan, there can be no intent already formed to use it in a way inconsistent with the terms of the loan.<\/p>\n Remember, no matter your property type or where you live, Penner Law Firm<\/a> and Hartford National Title<\/a> can assist you!<\/p>\n","protected":false},"excerpt":{"rendered":" People purchase properties for various reasons.\u00a0 Some people need a first home, or a new home.\u00a0 Some want a vacation house.\u00a0 Others live part time in different places.\u00a0 Think of the so-called \u201csnow birds\u201d for an example of this, where they live summers in the north and winters in the south.\u00a0 No matter the intended […]<\/p>\n","protected":false},"author":4218,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-375537","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/375537","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4218"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=375537"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/375537\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=375537"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=375537"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=375537"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}