Tom Heath with The Heath Team at Nova Home Loans here! I want to wish you a very happy welcome to the month of November. It’s November 2nd and we’re in the home stretch for 2020.
This week’s topic has to do with second homes, and when a home is classified as such. We in the lending world refer to a home as a primary residence, a second home or a non-owner occupied.
The primary residence is not the first home you’ve purchased. The primary residence is where you live so that you can earn your living. If you happen to be in Los Angeles and that’s where your income is made, and you are renting a home, but you want to buy in Tucson, that would not be your primary residence. That would be more like a second home.
Second homes are typically not in the city in which you live and they’re not where you are going to live full time. They are where you’re going to live a portion of the year. If you intend to rent out that property at all, including Airbnb, anything along those lines, within the first 12 months, we’re going to consider that as a non-owner occupied investment property.
So it’s very important that you have a clear conversation with your loan officers about the intent of the use of that home, especially during that first 12 months. Don’t want to get someone into trouble accidentally by thinking it’s a second home, but really it should have been treated as a rental property because of their use of it during that first 12 months.
Each one of those has their own set of criteria and there are rates and fees that will adjust based upon the type of occupancy. You just want to be very clear before you get too far into your search, that you know exactly what those terms are going to be. Once again, clear communication with your loan officer will make sure you end up in the right product and not end up inadvertently skirting the rules.
My name is Tom Heath. If you ever want more information, you can head over to our website, TheHeathTeam.com. Feel free to shoot us an email. Give us a call. Let us know if there’s a topic you would like us to cover on these updates. Until next Monday, I wish you a great week!