My mortgage bank do not let me apply mortgage as Second Home (aka vacation home)?

Asked by cpthk, Sunnyvale, CA Sun Aug 26, 2012

I am in the middle of the home finding. I do not work in California, but I am trying to buy a house in Santa Clara County. (My parents and my girlfriend live there)
My mortgage agent just told me that they had a change in the guideline that I am no longer qualify the mortgage as Second Home (aka vacation home), so I can only apply as am Investment Property, which I am REALLY not buying as that purpose. She also told me that the person who qualify as Second Home has to own the primary home for more than 3 years. I really do not want to buy as investment property since the rates are higher.
Anyway I can get around it?

PS: I honestly do not think those names of mortgage (First Home, Second Home, Investment Property) matters no more. Even you are really buy as a vacation home, you may not qualify for the banks' guideline, so they still put you as a different type of mortgage, which you are not really buying that purpose. THEY SHOULD JUST CALL IT MORTGAGE TYPE A, B AND C.

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Terri Vellios, Agent, Campbell, CA
Wed Aug 29, 2012
You received good answers from the Mortgage professionals here.

I suggest you follow their suggestions. Just because it doesn't make sense to you, the lenders have the money so they get to set the rules on who and how they qualify the borrower.

Be honest with them. If they charge more it is because the risk is higher to them. By the way the loan application is a Federal form. If you commit fraud it is a felony. Many borrowers are not aware of that. I have not heard of any lenders acting on fraud, but with what happened in the past we do not know what the future holds.

Also, the guidelines are for your protection as well.

Have an amazing day!
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Claudia Mull…, Mortgage Broker Or Lender, Fremont, CA
Wed Aug 29, 2012

The guidelines have, in fact, change regarding the 'second home' or 'vacation home'. Vacation homes now do, indeed, have to be located in a 'destination' community.

It is an underwriters call as to whether or not they can designate your purchase as a 'vacation' home.

This is where you need to tell the underwriter the story and provide supporting doucmentation.

Where do you presently reside? Are you in an area that you fly back and forth to SC County? Documentation like airline tickets would make it feasible that you come to SC County on a regular basis. Get copies of those tickets and write a very detailed letter on what you are doing.

Why do you live in another area (explain the job...perhaps you are putting in 2 years with that compay knowing they will transfer you back to SC County)

The more information you provide, the better the feel the underwriter has for your situation.

In the eyes of the lender, if you own a home where your job is and you are purchasing a second home outside of that area, which are you going to 'let go' first should you lose your ability to pay on both. If the lender sets you up with a loan that is an investment, then they can both sell it and possilbly foreclose on it differently. (Nonowner occ loans have less loopholes for the lenders to get their properties back). This would be the 'risk' factor to which GD refers in his answer below.

With any 'denial' or counter offer from the underwriter, the more information you provide, the more the underwriter sees the files as 'human' and then it becomes to make sense.

Let me know your complete details, we can write a letter...
0 votes
Gregorio Den…, , San Diego, CA
Tue Aug 28, 2012
You actually have not given enough information to answer your question. You may be able to purchase as a second home or even as a primary residence depending on your situation. The names do in fact matter and there is a tangible difference in risk to the lender between the three.

A principal residence is a property that the borrower occupies as his or her primary residence. Fannie Mae considers a residence to be a principal residence even though the borrower will not be occupying the property for children wanting to provide housing for elderly parents. If the parent is unable to work or does not have sufficient income to qualify for a mortgage on his or her own, the child is considered the owner/occupant. I don't know your situation but you may qualify for this.

Second homes also have specific guidelines which you may qualify for.
Must be located a reasonable distance away from the borrower’s principal residence. Must be occupied by the borrower for some portion of the year. Is restricted to one-unit dwellings. Must be suitable for year-round occupancy. The borrower must have exclusive control over the property.
Must not be rental property or a timeshare arrangement. Cannot be subject to any agreements that give a management firm control over the occupancy of the property.

You need a knowledgeable loan officer to sort it out for you based on your unique situation. If you would like assistance, please feel free to contact me.
Web Reference:  http://WeFixRates.Com
0 votes
If you are buying it for your mother to live in, you may qualify for primary residence status. Just because the person you spoke to does not understand or know the actual guidelines does not mean it cannot be done. There are a million loan officers out there and possibly 25% actually know what they are doing. Find one of the 25%.
Flag Wed Aug 29, 2012
Well, I am mainly buying as primary home, even though I do not live in that state. But I fly back every week. The mortgage agent said in this situation, it cannot be consider primary home. In the "meaning" of that house to me, it is primary residence to me, but the mortgage guideline does not allow that. So to me the name does not matter, what matters is if you qualify for that type of mortgage.
Flag Tue Aug 28, 2012
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