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Owner Occupied Property

Owner Occupied Property

A borrower uses the property as a primary residence.

An Owner Occupied loan is secured by property, typically with the borrower renting and occupying the space. If more than one unit, the lease payments may directly support principal and interest payments on the loan.

The occupancy type of a property indicates how the mortgage borrower will use the property. There are generally three types: owner-occupied; second home; and non-owner-occupied properties (rental properties).

Owner occupied mortgage requre lower downpayment than non-owner occupied. The underlying reasoning is that owner-occupied properties have a lower rate of default. Also, owner-occupied loans generally have lower rate comparing to rental properties.

In order to “prove” that the home is going to be your primary residence or second home, the lender may ask borrower to sign the occupancy affidavit. Lenders want to know that the loan is given to a home buyer that has the intention, at the time of closing, to live in the home. Although the lender will rarely check after closing, misrepresentation may be considered as a fraud against the lender. However, later on, the borrower may change his minds and move out.

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