2nd home or Investment Property

[Pandu Chimata]

I am in the process of puchasing an investment property (for short term rentals). How do I underwrite the loan?

By the face of it, it's an investment property - where it is going to be rented out and expected to make money? 

Also, being an vacation home, a lender suggested me that I can loan it as a 2nd or vacation home? It will be little less interest rate compare to investment/non-owner occupaid property.

Anyone in this situation?  Thoughts? 

[Shaun Weekes]

Originally posted by @Pandu Chimata:

I am in the process of puchasing an investment property (for short term rentals). How do I underwrite the loan?

By the face of it, it's an investment property - where it is going to be rented out and expected to make money? 

Also, being an vacation home, a lender suggested me that I can loan it as a 2nd or vacation home? It will be little less interest rate compare to investment/non-owner occupaid property.

Anyone in this situation?  Thoughts? 

 Here is the definition from Fannie Mae.  2nd Homes are actually the hardest to UW and your loan officer is way off on this one.  

Second Home Properties

The table below provides the requirements for second home properties.

✓	Second Home Requirements
must be occupied by the borrower for some portion of the year
is restricted to one-unit dwellings
must be suitable for year-round occupancy
the borrower must have exclusive control over the property
must not be rental property or a timeshare arrangement
cannot be subject to any agreements that give a management firm control over the occupancy of the property