Non Owner Occupied Mortgage Rates
Do you know that the non owner occupied mortgage rates tend to be higher compared to those properties that the owner actually live in to? For some, the idea of applying a much higher rate for the rates seems unfair, but let us clarifies things first: there is a reason why the non owner rates are considerably higher than a standard occupied home. A main house is a place where people would prefer to stay in for most of the time since the area might be close to work, or they have invested a lot on it already. Most non owner occupied mortgages are applied on second home purchases or vacation homes since there is a higher risk of this property being less used.
The non owner occupied rates have become high also due to the increasing need of most lenders to secure their finances as well since the market is very volatile. According to studies, the non owner occupied mortgage rates are higher by at least 3/8 percent as compared to owner occupied properties. The equity requirement for the rates also tends to be much higher, often reaching as high as 20% to 30% higher than your standard loan. You have to be aware about these factors and level your expectations since while you might be able to find a slightly better option for non owner mortgage, it will never be as good as the rates in an owner occupied space.
Why Are the Non Owner Occupied Mortgage Rates So High?
One reason is historically based. Most lenders experience a higher chance of defaulting on a second home compared to a primary home. The connection could be personal: a person investing on a secondary home could be easily decided not to continue with this investment or they might still be torn in completing the mortgage for the other property. Also, since the secondary homes tend to be used as apartments or vacation homes for rent, the homeowners might not be generating enough income to pay for the mortgage regularly, making them delinquent and affecting their credit condition. The non owner rates are higher not because lender do not want to offer the loan, but because only a small percentage of people are actually competent about paying the loan for a non owner occupied space.
Risks of the Non-Owner Mortgage
There is a lot more risk involved in owning a secondary home and that is why the non owner occupied mortgage rates are high. It is not a common trend especially in today’s economic climate and finding actual value out of a secondary home is quite difficult. Determining success in making some money out of it should be realized way before you even decided to have the property financed. Let us help you make the best choices for mortgage. All you need to do is choose your loan type, then choose the state and credit profile, so you can receive the rates from top lenders in your vicinity.