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Owner-occupied (O/O) mortgage loans have the lowest interest rates available in the market. Lenders are well aware that a borrower will take all measures to protect the property he/she lives in. The owner's “attachment” to the property is just as emotional as it is financial. This reality is reflected in the lower interest rate. You will pay about one to one and one-half per cent higher for an investment (non owner-occupied) (NOO) property.
Qualifying for a NOO is a bit different also. Theoretically, everyone can qualify for a NOO mortgage since the mortgage payment (principal, interest, taxes, and insurance) (PITI) is totally covered by the rental income you will receive. Therefore, your personal debt-to-income (DTI) ratio should not be changed. In fact, if you earn a good deal more than your PITI monthly obligation, your DTI will be improved.
Fair market value (FMV) will be based, not merely on the recent selling prices of similar homes in your area, but also on the income stream generated by a NOO property. Mortgage lenders assume (sometimes incorrectly) that you are purchasing investment for long-term income and appreciation (not a quick resale in a few months). Therefore, the monthly income stream and the historical vacancy factors are important in estimating the true FMV of an investment property.
Finding the right investment property is as important as any type of business endeavor. There are many types of property investments, calling for diverse strategies and styles. You don’t necessarily have to be a property developer in order to buy investment properties – in fact, just owning residential real estate property means that you've invested in real estate.
There are a lot of different kinds of real estate properties available in the market today. But not every property makes for a good and sound investment. You have to be on your guard before you decide on what property to buy. It isn't something that you rush into doing. You have to do some background check first on the property you like.
I wonder if I get the property with a loan owned occupied, and I rent the house. How picky is the bank with that?? is that possible? does people do that? How hard they are going to hit me??
Always considering that I'm on time with payments and no problems with the house!
could someone comment on this based on experience?
What proof need to submit to the city that it is owner occupied property
|Sheri Ann Richerson|