Mortgage Question: Second Home vs. Investment Home

[Grace Chen]

Hi, this is my first time posting. I hope I am posting to the right forum. My situation is (maybe) a little complicated so I hope I am able to explain it well.

I have purchased three houses before, mostly to live in, but currently only own one house that is being rented out. All other properties were sold. I am living out of state due to work, but am in the process of acquiring a new property in my home state for the purpose of 1) temporary living arrangement, due to possible relocation back to home state, and 2) eventual long-term rental property as this one will cashflow very well. I was very candid about my intentions with my loan officer.

Now, based on my income and situation, my loan officer told me that I qualify to purchase this home as a second/vacation home. It has a lower rate, similar to that of a primary, and once acquired, I can do whatever I want with it, including rent it out should I choose to. However, during underwriting, I was told that my "story" about being transferred home is not believable and the bank thinks I will be solely renting out this property. My loan officer has now also changed her story, saying that I need to occupy this property for at least 12mos before I am allowed to rent it.

Under these circumstances, which is the best approach to acquiring this property? Should I take out an investment loan or a second home loan? There is a difference of 0.875% in rate, and if I do get my transfer, I would not be happy having to pay more. On the other hand, I don't want to be on the wrong side of law if my transfer does not get approved. I am not trying to commit mortgage fraud or anything, but just trying to what is best for my situation.

Any advice is appreciated. Thanks!