Refinance a Second Home or Vacation Home

If I currently have a mortgage with Wachovia and want to renew do I have to be living in the house that I am remortgaging?

2 Answers

This question refers to the differences between an "owner occupied" home and an investment property or a "second/vaction" property.

For the sake of clarity I assume"renew" means " refinance". A borrower may refinance a property other than the primary residence at any time, subject to the guidelines for underwriting and qualifying criteria set forth by the lender engaged by the borrower.

Mortgages to borrowers for property other than the borrowers' primary place of residence carry more risk of default than an owner occupied residence, so lending guidelines are usually tighter for these properties.

Second homes or vacation property not generating rental income are less risky than a rental property. The reason for this is that the landlord is more likely to stop paying the mortgage in the event of a sudden vacancy and let the loan go into delinquent status, or even foreclosure. A borrower needin a place to live, on the other hand is more likely to find a way to continue paying to have a roof over their head.

Second or vacation homes are by definition not able or supposed to be rented, so qualifying is done based on regular sources of income and is not tied to the property itself.

Check with your lender and be honest up front when submitting an application for a mortgage, because misrepresenting the nature of the occupancy of the home is considered fraud and grounds for possible prosecution.

The short answer is NO you don't have to be living in a home that you want to remortgage.

However or BUT..Since the home is not your "primary" residence, it will be considered an "Investment" or Rental Property. This designation, while seemingly minor, will increase the cost of your new mortgage, potentially in the way of both the interest you pay and the costs that you will pay to obtain your new mortgage. Most lenders add from .50% to 1.00% to the interest rate on Investment Property and could add points to the closing fees.

So shop your mortgage carefully and get a Good Faith Estimate of Closing Costs before you apply.

There are also VA and FHA streamline refinancing options including options for a fha streamline mobile home refinance.