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Non-Occupying Co-Borrower vs Second Home

First off, thank you very much to those professionals who responded the other day to my assumption vs. refinance question. I will in fact speak to other lenders about refinancing. Before I do, I was hoping to get clarity on an aspect of my situation. The home is my parents' primary residence but it is also my second home. I actually stay there every weekend. Will there be lenders out there willing to refinance the home as a second home as opposed to treating me as a non-occupying co-borrower at higher rates? If not, what is it about my situation that would prevent it? The fact that it is my parents' primary residence and/or the fact that my parents can't qualify on their own or something else? I also imagine since second homes are difficult to verify, some lenders may just treat all non-primary as non-occupying. Would establishing a quitclaim deed and adding myself to the home ownership help at all? by Rain5150756 from San Diego, California. Aug 2nd 2013 Reply


Great question. In my experience with lenders, second homes are cut and dry. The days of gray area financing no longer exists. A second home must geographically make sense ( at least 50 miles away from the primary residence). You also need to be on title as a general rule for refinance, and the fact that your parents live in the second home has no bearing whether it qualifies for a 2nd home so long as they are not renting or being charged for living there, and you qualify with the second house payment. The distance requirement may change from lender to lender but anything less than 50 miles will no doubt lead to frustrating results. Hope this helps - Armando Nunez MLO over 20 years

Aug 2nd 2013
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,930 contributions

Generally speaking, non-occupying co-borrower loans do NOT come at a higher rate... Second home loans also do not come at a higher rate. Getting a second home loan is generally not an issue unless it doesn't make logical sense. For example, I am in St Paul, MN. You wouldn't have a second home in Minneapolis, MN., but you could easily have a condo in California. Some people say there is a mileage distance rule, but that is not true... It just has to make logical sense. www.JoeMetzler.com

Aug 2nd 2013
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If both of your parents are over 62 years of age, they may qualify for a reverse mortgage, which would reduce their financial outlay to onlytaxes and interest, and you would not have to pay anything at this time. Then when they no longer are living there, you can either get amortgage on the home (providing you are the heir) to have as second home (assuming as noted below) that it is at least 50 miles away. Otherwise, it will be considered an investment property and you would need between 20-30% down, depending on program -- but if yourparents are able to use the reverse mortgage program, that would give you, most likely, several years to work on building the down payment.

Aug 2nd 2013
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John Beman (AmFirstLending)
#554 ranked lender in California - 38 contributions

As a direct lender, we see situations like this all the time. There are certainly requirements that must be met in order to determine whether this would qualify as a second home for you. First of all, do you own another property? If you don't, this can't be a second home. Next, is your parents property in an area that would be considered a vacation destination (ie: near the beach, mountains, etc.). If the answer is no to both of those questions, trying to finance the property as a second home is going to be nearly impossible. The simplest option would be to do the loan as an owner occupied refinance with your parents as the primary borrower (I understand they can't qualify by themselves) and you as the non-occupant co-borrower. FHA allows for this type of situation and the rates would be as an owner-occupied loan. Another option would be to consider an FHA reverse mortgage. Your parents as long as they meet the age and equity requirements would qualify as there is no credit or income criteria for those types of loans. Some food for thought. If I can be of further assistance, please let me know. John Beman 888-779-6500 x 7315

Aug 2nd 2013
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Edgar Aranda (earanda)
#754 ranked lender in California - 93 contributions

We can do this as a 2nd home, so long as your parents stay on the loan. If you have any further questons, please feel free to give me a call at 858.663.0472. We are also local to you and have an office in downtown San Diego if you would like to come in and discuss.

Aug 2nd 2013
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