Non Owner Occupied Loans
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One of the great loans for non owner occupied property is the Pay Option ARM. This is a loan that allows you to make a minimum payment that is less than the interest payment. For investors who will be making a great deal of money off of their property, this loan is a great tool to maximize your cash flow.Lenders like to see cash reserves after closing for investor loans. This means you will have funds if your property needs repairs, or if you have have occasional vacancies in your property.
Non owner occupied loans are generally at a higher interest rate. This is because these lender see these loans as having a higher possiblity of default than owner occupied loans.
Non owner occupied mortgage loans are considered more risky than primary home loans and therefore reflect a higher rate associated with the higher risk of lending on non owner occupied mortgage loans.
Non Owner Occupied Loans typically have special requirements when it comes to appraising the property. The appraiser will do a rental analysis of properties in the area to determine the fair market value of the investment property. You will have to consider this when you are about to acquire an investment loan.
Non Owner Occupied loans are one of the segments which has been most impacted by the previous expansion and current contraction in the capital markets for mortgage backed securities. The more documentation you are able to show on a non-owner occupied loan application, the more you will be able to borrow against your new rental property.
Non owner occupied loans require very strong credit and are normally full doc loans. Stated non owner occupied loans are available but more then likely will require a down payment.
For those investors or consumers with rental properties that need non owner occupied loans, interest only loans are a very popular choice. Interest only loans do not carry as much risk as the Pay Option ARM loans and they are still a great way to maximize cash flow on your non owner occupied investment properties.