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Non-Owner Occupied Refinance

We turned our second home into a rental property, and now want to refinance. Do we get a conventional refinance or need a non-o

A residential home is purchased as a second home then is subsequently converted to a rental property. If that property were to be refinanced now would this require a investment property loan (I think that's what you call it for a rental home) or could it still be refinanced as a second home since that is the existing mortgage?

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If you show rental income or expenses on a Schedule E for that property, then the lender will consider the property a non-owner occupied property, and will require you to get a non-owner occupied loan, also known as an investment loan.

The term "non-owner occupied" is applied to a single-family home that is rented to tenants. The description is important from a mortgage standpoint, because lenders perceive a non-owner occupied property mortgage as being more risky than an owner-occupied property mortgage.

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Bill

Bills.com

2 Comments

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  • SB
    May, 2011
    susan
    For the life of me, I cannot find a lender that will do a refinance on a non-owner occupied home with no equity - any suggestions?? Where did all this money go into rebuilding finance institutions from our government that the taxpayers ultimately are paying for?? Aren;t they suppose to help us instead of turning us away?
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    • BA
      May, 2011
      Bill
      Mortgage underwriters and investors are humans. When the mortgage market was a never-ending party from 2000-2005, underwriters approved loans for any applicant with a pulse and a triple-digit credit score. In other words, everyone. Today, underwriters and investors look for excuses to give an applicant a thumbs-down. The pendulum swung the other way. This does not solve your problem, but it explains the mind-set of people approving and buying mortgage loans.
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