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Investment property vs 2nd home purchase

by barbarabw202 from Pompano Beach, Florida. Feb 6th 2019 Reply

William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,728 contributions

More info needed, But in its simplest terms, 2nd home purchases have a minimum of 10% down payment requirement, but the interest rates are very close to owner occupied purchase. Investment property purchase requires 20% or more down and will have higher interest rates. This is because investment purchases carry more risk for the lender.. if you own a primary residence and an investment property and your life falls apart, you will most likely let the investment property go long before your primary home. Lenders have specific rules about 2nd home purchases and investment.. keep in mind that they have seen just about every situation.. there are a lot of people who try to fool the lender and say they are buying a 2nd home, when in fact they have no intent of living in it.. This would be loan fraud, and the lenders look for it.. Lenders have rules about 2nd home purchases in regards to the distance to your primary residence.. so, if you are looking for a 2nd home that's 2 miles up the road, the lender will never approve you for a 2nd home.. but if it's 50 miles away on a lake, then you will probably be fine.. Understand that it all comes down to intent.. If you buy that lakeside home with the intent to live in it for 1 week a year and Air B&B the other 51 weeks of the year, then this is an investment purchase.. Also, if you live in it 51 weeks out of the year and intend on renting it for 1 week.. it's still an investment purchase.. Lenders are always looking for loan fraud, and loan fraud is investigated by the FBI.. It's really not worth the few dollars you might be able to save vs. the implications of being caught up in loan fraud. Understand that i'm not accusing you of anything,,, As I said first off.. I need more info, but your question in comparing investment to a 2nd home purchase leads me to believe you are considering both to see if one is going to cost less than the other... but in reality, they are opposites.. Keep in mind that under current lending rules, regardless if you purchase a new primary residence or a 2nd home, you are required to live in the home for 12 months prior to turning it into a rental. I taught for years on how to build wealth.. and the objective was to buy a new primary residence, put the minimum down, then after 2 years, rent it out and buy another new primary residence.. in 20 years, you will have 10 properties,,, this is allowed, but you cannot enter into a purchase transaction stating you are going to live in it, then never move in.. 100% loan fraud. I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 NMLS# 226347 / LendUS, NMLS 1938/ AZMB0121893

Feb 7th 2019
Jason Bennett (jbennett)
#103 ranked lender in Pennsylvania - 70 contributions

2nd home must be a certain distance away from primary residence to be considered as such and require 10% down minimum conventional finance. Investment property--possible to go 3.5% down thru fha if you will be owner occupy on a multi unit home, if not..will be required to put 20% Down with conventional finance.

Feb 7th 2019
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