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Updated about 3 years ago on . Most recent reply
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Define "Investment property"? Using 2nd home mort for Air Bnb
I am in the 11th hour leading up to clear to close. My bank just sent me an email telling me that the underwriter wants me to sign and date something that says I will not use this property as an investment property.
We are using this property as a second home and a vacation property, but still want to AirBnB to help offset cost of mortgage and repairs.
Will I be committing fraud if I state that I will not use as "Investment property" and then list it on AirBnB?
What can I do?
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Thanks everyone for the feedback.
The takeaway is exactly what some of you have suggested, "Define investment Property" Thanks @Joe C. and @Keyla Rosario and @Dave Stokley
I spoke with my lender and here is a little more info that might be helpful for other that read this discussion.
First off, they explained that they needed this because I was applying for a 2nd home and was only paying 10% down and that triggered PMI. So I now have options, either pay more to avoid the PMI or sign a document.
About the PMI, I weighed the plusses and minuses of paying PMI short term vs. paying 20% down. I have enough to pay the 20% to avoid PMI, but being that it is winter, speculation of the market being so unpredictable, etc. I decided that 10% and retaining cash was a better decision than suffering a relatively small PMI expense.
So, now back to the definition of "Investment property"
TL;DR - lender is helping me to write the letter in a way that prevents fraud AND allows me STR options
Here is the definition that was sent to me from my lender regarding the definition: source Freddie Mac second Home Mortgage guidelines
The Borrower must occupy the second home for some portion of the year
The Borrower must keep the property available primarily (i.e., more than half of the calendar year) for the Borrower's personal use and enjoyment
The Borrower may rent the property on a short-term basis provided that the property is not subject to any rental pools or agreements that require the Borrower to rent the property, give a management company or entity control over the occupancy of the property or involve revenue sharing between any owners and the developer or another party
You were right @John Transue and @Keyla Rosario and @Brent Huling I only need to occupy it part time, and can rent it out with no penalty of fraud.
So, I am pleased to say that, because I have an amazing lender, I will be CTC by 9am tomorrow!
Thanks again for the discussion