The Price Difference Between Owner And Nonowner Occupied Loans

Dated: 03/30/2016

Views: 122

Post from http://loansbyhelen.com/


Borrowers who misrepresent their intended use of the property they are financing are a major concern for lenders. Occupancy fraud is one of the mortgage industry's biggest challenges, and loan agents are well versed in the repercussions, and work on educating our clients about the importance of correctly reporting occupancy.



But from a lender’s point of view, what is the difference between an owner occupied home and a non-owner occupied home? The mortgage industry assigns pricing and mandates specific underwriting guidelines based on perceived risk. Properties that are not going to be occupied by the borrower are referred to as investment properties and are more likely to go into default than owner-occupied homes.




Mortgages on homes that will be occupied by the borrower as their principal residence are least likely to go into default and foreclosure. This is because a borrower facing tough times is more likely to walk away from a rental property than the home he and his family lives in. The third category of occupancy is the vacation home. Mortgages for these properties are given rates comparable to those on owner-occupied homes but their location must make sense as a vacation home.



To compensate for the increased risk of foreclosure, rates for mortgages on investment properties, also called non-owner occupied properties, are higher (roughly .375%) than for loans on owner occupied homes. In addition, non-owner occupied loans require a higher down payment – usually a minimum of 20%. Since most borrowers want the lowest rate with the least amount of down payment possible, it has proved tempting for some homebuyers to state that they are going to live in the home even though they have no intent on doing so. It is best for all parties involved to be open about the occupancy of the property, and your agent will work with you on the best financing possible.


Start your Northern Kentucky Home Search NOW!  http://tim.northernkentuckyhomesearch.com/




Image titleFeatured properties may not be listed by the office/agent presenting this brochure.  Information has not been verified, is not guaranteed and is subject to change.  The data relating to real estate for sale on this report comes in part from the Internet Data Exchange program of Northern Kentucky MLS. 
Equal Housing Opportunity
At Regional Realty, we are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex, handicap, familial status, or national origin. 

Blog author image

Wendie Neely

Wendie Neely is licensed in both Kentucky and Ohio. Her background includes several years as a Real Estate Appraiser placing her in a unique position to help Buyers and Sellers understand property val....

Want to Advertise on this Site?

Latest Blog Posts

The Knockout Punch

OK. So you may not be fighting for the Heavyweight Championship of the World, but… Finding, negotiating, and purchasing a home, especially in a market heavily favoring the Seller, may feel like it

Read More

Welcome Home To 310 Links View Drive Butler KY

A convenient drive south along US 27 into Pendleton County yields high rewards, both in terms of cost per square foot AND quality of living!!  Country Club Hills subdivision, situated

Read More

First Remodel Click Link For Great Tips

What It’s Really Like to Live Through a

Read More

REAL ESTATE SUCCESS IN 2019 BUYING OR SELLING

ASKING FOR YOUR REAL ESTATE BUSINESS IN NORTHERN KYMany different services available, let me explain for you.  Full Service listing service 7%  3% to selling Agent---4% to listing

Read More