When applying for a mortgage, a borrower’s “Occupancy Type” is a major factor in determining maximum loan-to-value (equity), loan program available and mortgage interest rate. An Owner Occupied property will have better terms (less down payment, better rates) than a Non-Owner Occupied property.
Three Types of Occupancy:
Owner Occupied / Primary Residence -According to HUD, a principal residence is a property that will be occupied by the borrower for the majority of the calendar year. At least one borrower must occupy the property and sign the security instrument and the mortgage note for the property to be considered owner-occupied.
Second Home -To qualify as a second home, the property typically must be at least 50 miles from the primary residence, and the subject property will not be used for rental investment purposes.
Investment Property/Non-Owner-Occupied -A property that is not occupied by the owner and typically utilized for rental income purposes.
Typical Down Payment (Equity) Requirements:
Owner Occupied / Primary Residence – Purchases for VA and USDA can go up to 100% financing, while FHA requires 3.5% of the purchase price as a down payment. Conventional financing may require anywhere from 5% – 25% depending on the credit score, county, property type and loan amount.
Second Home -Average 10% down for a purchase, and 25% equity for a refinance.
Investment Property -Down payment requirements will range from 20-25% depending on the number of units. Typically, a cash-out refinance on an investment property with 2-4 units, requires a loan to value not to exceed 70%.
When applying for a mortgage, be upfront with your loan officer: What is the true intention of the use of the property…a borrower’s “Occupancy Type” is a major factor in the amount of down payment required, loan program available and mortgage interest rate.
MORTGAGE INTEREST RATES for June 21, 2012:
- Conventional 30-Year Fixed 3.875%/ 4.050% APR
- Conventional 15-Year Fixed 3.00%/ 3.182% APR
- Conventional 5/1 ARM 2.750%/ 3.019% APR
- FHA/VA 30 Year Fixed 3.750%/ 3.991% APR
- Jumbo 5/1 ARM 2.875%/ 3.66% APR
- Jumbo 15 yr Fixed 3.375%/ 3.630% APR
- Jumbo 30 yr Fixed 4.750%/ 5.010% APR
*The above mortgage rates are based upon an 80% LTV, o/o single family with FICO scores of 720.
Paramount Mortgage is a locally owned Mortgage Banker celebrating our 41st year. Great rates and programs are secondary to what is most desired in a lender relationship: Integrity, Communication and Customer Satisfaction. Be to check out our website: www.paramountmortgage.com
For more information or if you have questions on mortgage rates you may contact me by phone at my direct line, (314) 372-4319, email at firstname.lastname@example.org or you can visit our company website at http://www.paramountmortgage.com.