Owner-occupied Loans
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Credits aren’t always aimed for real estate investments and purposes but rather for people that finally want to purchase their own home. However, several conditions apply for this and limit them to obtain the required capital for this goal, unless they can apply for others such as owner-occupied loans.
The common credits for purchasing a home lie in traditional ones where a large list of requirements and conditions are established and it is quite hard to have your loan approved. Especially if a bank, insurance, pension funds, or similar institutions, are the ones considering your application.
Now, some of the limitations for people to purchase a new property don’t focus on your ability to repay the loan but rather on the property you want and the use you will give it. If you are planning to purchase it as an investment, just like real estate investors do, you will have problems acquiring the loan from certain institutions and even private lenders. The reason behind this is that lending money to people that go for investment purposes represents a higher risk compared to those that are aiming to occupy it.
Why? Because the possibilities for repayment are higher when you know the borrower is very likely to use it as a place to live. Since this is a situation that concerns both the borrower and lender, owner-occupied loans were created to cover those in need of credit to finally obtain their homes and with not utter goals. But to begin with, what’s the difference between a loan for investment purposes and one for truly residential goals?
The conditions for application but also repayment. This is very important to understand if you are either an investor or owner-occupied that will live in the property—being this last term from where the name of the loan comes from. Our team at Commercial Real Estate Loan Pros of West Palm Beach can clear all your doubts and guarantee you are able to understand the pros and cons of going for this mortgage instead of a traditional one.
Starting with the fact that you have more opportunities to pay for the loan if you go for an owner-occupied one. Investors and homeowners have different benefits, being the second ones the group that receives the most.
What does owner-occupant mean and why is it crucial for you to know?
Nowadays, most of the people that request or apply for credit are those dedicated to the real estate industry, which has driven many institutions and even private lenders to establish more conditions and requirements for anyone to obtain a loan. The reason behind this is because even when real estate can be a very lucrative business, not everyone has success in it.
Actually, it has been proven that the percentage of people who fail is more than the one that succeeds. This leads lenders to have problems having the funds paid back despite the contracts and agreements they have with most investors. But the ones that usually have it harder are those aiming for a loan in order to acquire a home. ‘Owner occupant’ means that the borrower of the credit will live in the property that is going to be purchased.
This means he or she won’t be an ‘absentee owner’ but rather someone that will take care of the property and use it for at least a year. For lenders, this gives them more security and feel relieved due to the number of owners occupied that actually repay their credits. Therefore, if you are one or consider yourself to be a fit for the conditions it takes to be it, you should always aim for an owner-occupied loan instead of other common ones. This will bring you more chances of approval, better terms in the agreement, and lower interest rates.
How can you show you are an owner occupied interested in a loan to live in the property you will purchase with it? You have to move during the first 30 to 60 days after purchasing your home and live in it for at least a year. Some lenders are more strict with the conditions and tend to give up to 30 days to move in and ask for at least 2 years of residence in the property.
At Commercial Real Estate Loan Pros of West Palm Beach, we do need proof that you are aiming to stay in the house when applying for your mortgage. But we are more flexible with the time you have to stay and give you enough days to move in just in case the property needs a few renovations. With this clear, you also need to understand that the longer you prove to be an owner-occupant and live in the property, you can obtain extra benefits like lower interest rates over the years.
What do you need to apply for an owner-occupied loan?
Although it is mostly about your condition as an owner or future one, it is necessary to cover certain documentation. To guarantee you will live in the property and meet the conditions that qualify you as an owner-occupant, you need to sign an Owner-Occupant Certification document that must be provided during your application. Besides this, we only request the usual ID, documentation with your financial information, and regular paperwork to determine how capable you are to repay the credit.
However, don’t hesitate nor worry too much about the requirements. We understand you might find it overwhelming to meet different conditions without even applying for the loan, and some lenders establish very difficult ones just to prevent certain people from requesting one.
In our company, we don’t work in this way since we want you to have your credit approved, but by only meeting a few requirements and conditions that are more than reasonable for any person and owner. If you decide to go for an owner-occupied loan with us, keep in mind we will offer you flexibility for payments and fair interest rates for the short and long-term. You are welcome to request it anytime as long as you provide the basic documentation.
There are so many areas or regions where we offer these services with most of them being cities.
However, if you need any of these services, you need to contact us. The list below comprises the areas where we offer these services.
We service all counties and cities throughout South Florida. However, if you need any of these services in other cities throughout the state of Florida, please contact us. See what services we offer below:
