Dear Rhonda “Is this a second home or primary residence”?

I recently received this question from one of my readers:

Dear Rhonda,
I am looking for information about the general way loans are done related to primary residence or second home.

I currently own 2 duplexes. My wife and I are renting and working in a location that is around 130 miles away from the location the home we want to buy is located. My wife has no loans in her name and was able to qualify due to good credit and job at current location 130 miles from home we want to buy. We are trying to buy a place that is far from our work with the plans of moving to this location.

“Lender one” wants to do the loan as a primary residence and get us a better rate.

“Lender two” feels we must do the loan as a second home for it to be approved.

What is right here? Is it possible that one lender can only do it one way with the banks they work with and the other could do it another way. I hope you respond to this because were being told two different things and want to do what is right. Thanks.

Dear Reader,
For starters, I cannot give legal advice and really cannot give underwriting opinions as I’m not an attorney or an underwriter. Different banks or lenders may have different underwriting guidelines and/or underwriting overlays.

In my opinion, I would think an underwriter would have questions about how a home that is 130 miles away from your jobs could possibly be your “primary residence”. In order to qualify as a primary residence, you must occupy the home within 60 days from closing.  Most people would not want to do a 13o mile commute! 😛

If you are NOT going to rent then home out, then I believe it’s possible it could be viewed as a second or vacation home. Again, this is up to an underwriter. Since you already have a couple rentals, an underwriter may ponder how likely it is that the new home may actually wind up as an investment property and not a second home. The underwriter will also consider the property type of the new home as well as the location.

Bottom line, it’s the underwriters call. If I were you, I would ask both lenders if an underwriter has reviewed your scenario and if not, see if they will do this before you get too deep into the transaction and wind up finding out that the only way you can get financing may be as an investment property.

Good luck!