Blog
What’s the difference between a Primary Residence, Second Home or Investment Property?
Nov 13
6:58
AM
Category | General
When applying for a mortgage loan you will be asked how your property will be used. Let’s take a look at the differences between the 3 occupancy types and how it could affect the final cost of a mortgage.
Primary Residence:
If you plan to move all your belongings into a new place you’re getting a primary residence. A primary residence qualifies for the lowest minimum down payment and lowest mortgage rate. Why? Because lenders view a primary residence as a low-risk property since homeowners are likely to stay on top of their mortgage payments.
1. Must live in the home for the majority of the year
2. Must be a convenient distance from your job
3. Must live in the home within 60 days of closing
4. If you own the home already and are refinancing, you must be able to prove your residence through documentation such as tax returns and government identification.
Second Home:
Are you considering a vacation home near the beach or a place closer to your job’s second location? In this case, a lender would classify this as a second home. It depends on how you occupy the property (not whether this is the second home you have ever purchased).
A second home will meet these conditions:
1. Must live in the house for some part of the year
2. Must be a reasonable distance from your primary residence
3. Must be under your control. The home cannot be subject to rental, timeshare or property management agreement.
It’s important to understand that if you don’t plan to live in your second home full-time, location can affect if it is going to be considered a second home or not. In addition, if the location of your second home is too close to your primary residence, you could be subject to higher mortgage rates of an investment property.
Investment Property:
If you intend to use your property for tenant rental, it must be classified as an investment property. An investment property is a property that is not your primary residence and is purchased or used in order to generate income. The good news is that you can use the expected income from the rental property to qualify for the new mortgage. There are many types of investment properties. For example: residential rental property, commercial property and property purchased to “flip”.
What does it take for your property to be considered an investment property?
1. The home is within 50 miles of your primary residence and not in a location that makes sense as a second home
2. You plan to collect rent from the property (you may have to submit a lease agreement that confirms the property is occupied by a tenant).
Keep in mind, investment properties have the highest interest rates and down payment requirements compared to other property types. and also require a higher credit score.
BOTTOM LINE:
The property’s occupancy will be determined during the underwriting process.
Wondering how your budget might be affected by either occupancy type? Give one of our loan experts a call today to discuss - 732.832.2967
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Greenway's Markets in a Minute Update - Rates hold steady after midterm elections
Nov 9
1:48
AM
Category | Markets in a Minute
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| For the Week Ending November 9, 2018 |
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Please enjoy this quick update on what happened this week in the housing and financial markets.
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The Fed didn't raise policy rates at this month's FOMC meeting but is expected to raise rates in December. Mortgage rates will likely remain unaffected. |
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The midterm election results are not expected to slow economic growth. As a result, the outcome did not adversely affect stock and bond markets either. |
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Manufacturing activity slipped for a second month in September yet still pointed to growth. Construction spending was up slightly at 0.1%. |
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Year-over-year purchase applications have held steady despite rising rates, falling 0.2% last week. |
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Last month, consumer housing sentiment fell to its lowest level in a year. Fewer consumers expect home prices to rise or mortgage rates to fall. |
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A recent study shows Gen Z is eager to get an early start on homeownership. They're twice as likely as previous generations to start saving for a home by age 25. |
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Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends can differ from our own and are subject to change at any time. |
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Greenway's Markets in a Minute I Homeownership Rate Increases
Nov 2
12:55
PM
Category | Markets in a Minute
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| For the Week Ending November 2, 2018 |
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Please enjoy this quick update on what happened this week in the housing and financial markets.
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Consumer spending rose for a 7th straight month in September, but personal income recorded its smallest gain in more than a year on moderate wage growth. |
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Companies continued to hire at a brisk pace in October. Private payrolls rose by a better-than-expected 227,000, according to ADP and Moody's Analytics. |
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Despite a strong labor market and increasing inflation, the Fed is not expected to raise policy rates at next week's meeting. A December rate hike is likely though. |
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According to Case-Shiller, home price gains tempered to a 5.8% yearly increase in August. This is slightly lower than prior readings yet still a healthy rate. |
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Mortgage application volume fell 2.5% last week compared to the previous week. Refinance applications were down 4% last week after previously improving. |
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Despite low inventory, the national homeownership rate was 64.4% in the third quarter. That's a half-percentage point higher than it was a year ago. |
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Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends can differ from our own and are subject to change at any time. |
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The home you've always dreamed of may be within reach. Did you know that Greenway Mortgage offers a Jumbo Alternative Program? We understand that when it comes to your dreams, one size does not fit all.
Our Jumbo Alternative Program provides several options that will help you achieve your financial goals. With that said, we are able to provide more products, more choices and more advantages for you!
If you are able to demonstrate the ability to repay and are looking for higher loan amounts with more flexible guidelines, Greenway’s Jumbo Alternative Program can provide the perfect lending solution.
This program allows for non-conforming scenarios to finance loan amounts beyond $4MM with LTVs up to 95%, DTIs up to 55% and FICO down to 660.* Take a closer look at some of the key features this program has to offer.
KEY FEATURES
- Loan amounts beyond $4MM
- Purchase, Rate and Term / Cash-out Refis
- Unlimited financed properties, 2nd homes allowed
- ARM, Fixed and Interest only programs available
THE FINE PRINT
- Based on loan characteristics, approvals may take longer than typical Greenway time frames
- Multiple appraisals may be required
- Risk profile may limit certain criteria
Eligibility requirements, exclusions and other terms and conditions apply.
For more information on Greenway's Jumbo Alternative Program contact us today.
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Greenway's Markets in a Minute I Stocks Routed but Rates are Stable
Oct 26
5:41
AM
Category | Markets in a Minute
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| For the Week Ending October 26, 2018 |
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Please enjoy this quick update on what happened this week in the housing and financial markets. |
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This week's stock rout drove some traders to seek safety in bonds, causing mortgage bonds to perform well and helping to stabilize rates. |
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Orders to U.S. factories for big-ticket manufactured goods slowed in September. However, they were still up 0.8% from August, pointing to economic growth. |
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Although new applications for unemployment aid rose last week, the number of people receiving benefits fell to a 45-year low, signaling labor market tightening. |
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New home sales dropped 5.5% to a near 2-year low in September. However, numbers were likely affected by Hurricane Florence and could be skewed. |
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September's pending home sales were slightly lower than a year ago but were up 0.5% over August. Affordability continues to weigh on buyers. |
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Mortgage applications rose 4.9% from the previous week. Purchase apps rose 2% for the week and were basically flat compared to a year ago. |
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Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends can differ from our own and are subject to change at any time. |
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