Basics Of Investment Home Mortgage Loans

There are various investment home mortgages.  If a homeowner wants to purchase a second home, there are certain criteria that would classify it as a second home.  Otherwise, it would be classified as an investment home.  If a home buyer wants to purchase a second home, it needs to make sense to the mortgage lender.  If the second home is only a few miles away from the home buyer’s primary residence, it does not make sense to the mortgage lender.  The mortgage lender would classify it as a second home.

Investment Home Mortgage Loan Versus Second Home Loan

Investment home mortgage loan programs have higher mortgage rates than second or vacation home mortgage rates.  Second or vacation home mortgage rates are almost the same as an owner occupied home’s mortgage rates.  However, interest rates on investment home mortgage loans are much higher.  If the second home were a waterfront property, that would definitely classify it as a second or vacation home.  Sometimes it can still be classified as a second or vacation home even if the home buyer’s primary residence is less than 60 miles from the second home.

Down Payment Requirements On Investment Home Mortgage Loan Programs

On most investment home mortgage loan programs, mortgage lenders require a 20% down payment.  Down payments of less than 20% is available for investment home mortgage loan programs to borrowers with exceptional credit and strong income and assets.

Potential Rental Income On Investment Home Mortgage Loans

A great advantage for mortgage loan borrowers who can put a 25% down payment on an investment home is that 75% of the projected rental income of the investment home can be used towards income for the mortgage loan borrower in qualifying for the investment home mortgage loans.  This is important because the investment home mortgage loan will increase the debt to income ratio on the home buyer.  Even if the home buyer does not intend on renting the investment home, the mortgage lender will allow 75% of the market rent of the investment home to be counted as income in the proposed debt to income ratio of the new loan.

If you have any questions on investment home mortgage loans, please contact me at 262-716-8151 or email me at gcho@gustancho.com.  You can also visit me at www.gustancho.com .  I can help you in financing your investment or vacation home.

2015 Update On Investment Home Mortgages

This mortgage blog article post was last updated on May 9, 2015.

Gustan Cho, NMLS ID 873293

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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