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09-12-2008, 01:01 PM #1
Renter
- Join Date
- Sep 2008
- Posts
- 1
Mortgages questions
Im going to begin the process of saving to purchase another home in order to sue it as a rental. I have noticed that most banks tack on interest points and requiere extra fees if you state the the property is going to be an investment or non-owner occupied property.
So my question is since I already own a home that I wish to keep. Would it be wise to go into the bank requesting a loan for a second home that I intend to live in an attempt to avoid those extra fees and thus lower my time requiered to save the capitol for this purchase?
Who's to say what I do with the property after its all said and done?
If they ask about it couldn't I just tell them that I will be renting my current home?
Do the banks suspect this and deny you the loan or tack the fees on anyway?
Thanks!
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Real Estate Investment Property Mortgage
To begin with, yes, banks are wise to you. They'll know it's a second home because your mortgage shows up on your credit report, and they'll look to see whether it's an area with a lot of second homes (like a ski resort town) or whether it's a rental investment unit area. Trust me, a good underwriter will bust you, and in this market, all the crappy underwriters are home washing dishes and doing laundry and reminiscing about when they used to have a job.
Second, you shouldn't be buying rental properties in your personal name anyway (see How to Protect Your Real Estate Assets: A Landlord's Legal Guide).
So here's my advice: form a legal entity, use it to hold title when you buy rentals, and find a good loan program that doesn't beat you up too badly, but shortcuts are for people who have been doing this stuff for a long time, and even then they can cause trouble.
Here are some good resources for nascent landlords:
Real Estate & Rental Property Investing Blog
How to Screen Tenants - A Landlord's Guide
Real Estate & Property Management Articles Database
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