Many people like to buy second homes as investment properties. They figure that this is a great way to have a long-term investment that will always bring in money - a veritable "cash cow," so to speak. After all, there are always willing renters out there. This type of an investment property, a property where you will not be living, is called a non-owner occupied home. If you're going to look for a mortgage to buy a non-owner occupied home, there are things you need to be aware of.
What's the Deal With Non-Owner Occupied Homes?
Non-owner occupied homes, which can also consist of second or vacation homes, tend to carry a higher mortgage rate than a first, owner-occupied home. This is because statistically, non-owner occupied homes have a higher default rate than normal mortgages.
In fact, bankers and other lenders will often scrutinize mortgages in order to make sure that the borrower is honest when she or he says that the mortgage is for an owner-occupied home: experience has taught them that some people will try to hide the fact that they're buying a non-owner occupied home so that they can qualify for the lower interest rate on their mortgage.
As with all real estate transactions, taking out a mortgage on a second home or non-owner occupied home has some details that you need to be aware of before you set about trying to secure one.
In order to make sure you know what you're doing before you start, you need to speak to mortgage specialists, such as the lending officer at your local bank.
