Mortgage Occupancy Classifications

I’d like to THANK C.J. Winchester from Service First Mortgage for the below article.  There are new challenges and opportunities in the mortgage industry everyday…  C.J. has decided to pick a real scenario each week to help the general public better understand the changes that have taken place in mortgage lending. She choose this topic after she spoke to a potential client last week that was ready to sign the sales contract on Investment property but did not have any idea that he would need a 20% downpayment.  It is difficult to obtain PMI or secondary financing on investment property so that means a downpayment of at least 20% which is dependent on FICO scores. 

There are only 3 catagories of occupancy on mortage loans which is as follows:

Owner Occupied
· Also known as Primary Residence
· Eligible for homestead exemption
· This is the home where the borrower lives
· Co-borrower can be non owner occupant but program restrictions apply

Non Owner Occupied
· Borrower does not live in this home
· Property can be rented-also known as investment property
· Sometimes a family member lives in home
· Is not eligible for the homestead exemption
· Must do a conventional loan with at least 15-25% down
· Difficult to get PMI
· Difficult to obtain 2nd liens
· Must have strong cash reserves remaining after loan closes
· Must count full payment and cannot offset with a new lease
· Rate is higher than owner occupied
· Seller contribution is maximum of 2% of sales price

Second Home
· Typically in a vacation area
· Property cannot be rented
· Can be purchased if borrower stays in the home on a part time basis
· Rate and downpayment may be higher than the Primary home
· Not eligible for the homestead exemption

 

If you would like to have C.J. send you some information on a weekly basis regarding the Mortgage industry please send her an email at cj@waymark.net

C.J. Winchester
Service First Mortgage
175 Ridge Road, S# 600

McKinney, TX  75070

972-562-0096   Office
972-562-0087   Fax
214-298-3156   Cell

cj@waymark.net
www.cjwinchester.com
http://cjwinchester.blogspot.com

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