Owner Occupied Purchase
When you buy a house, you can choose to live in the house (called an owner occupied purchase) or you can not live in it. In the second case, the house may be a rental, or a vacation home, or the property was purchased for a child/parent. Owner occupied purchases are eligible for lower interest rate loans and may require less down payment. Thus given the two options, an owner occupied purchase will get you a better deal in terms of interest rates and loan options.
Rules of an Owner Occupied Purchase
There are only 2 rules regarding an Owner Occupied purchase.
1) You need to start living in the house within 60 days of purchase.
2) You should live in the house for at least a year.
If you declare that the home will be your primary residence, but you don’t live in it after purchase, then you will be committing “Occupancy Fraud” (mortgage fraud, bank fraud). If the lender pursues the matter, you could suffer financial penalties, prosecution, and even prison time. Thus, don’t say you will live in the house if you know that you will be using it as a rental.
After you have lived in the house for over a year, you are free to do other things with the house such as rent it out. In some rare cases, the lender may be willing to forgive you for using the house as a rental without living in it for a year – for example, you lost your job and needed to convert the house to a rental as a way to earn money. These are evaluated on a case by case basis.
Applewood Funding Inc offers Owner Occupied Hard Money Loans to those who qualify. If you can’t get a loan from a bank or a credit union, Applewood Funding Inc can help. Hard money loans require fewer documents and are approved much faster than traditional mortgage loans. Call us to learn more: (480) 808-8687.