Will this be the right place to ask this?!

I'm starting my first job in mid-July in New York City. Obviously, I won't be able to afford to purchase a condo, apartment, co-op, etc. I feel like housing prices are still decently priced, and purchasing an investment property might be an option for me.

If I want to purchase a townhouse or condo to rent out, can I get away with declaring this "my" townhouse (since it'll be my first property purchase)? This way, I could do a much lower initial down payment and get a lower rate on my mortgage rate.

Or would this 100% have to be an investment property in the eyes of a lender (and thus increase my initial down payment and rate)?!

Any and all advice would be greatly appreciated!

Thanks,
Jon

6/30/2007 8:37:48 PM

did you really not see the real estate thread?

6/30/2007 8:56:49 PM

Yep, you can technically do it as "your 1st residence" and get away with it because you could always buy a house expecting to live in it and then decide to rent it out a few days later. If you already own a house then it has to go down as "your 2nd residence" and if you already own 2 homes then it has to be investment property.

6/30/2007 9:14:02 PM

Actually a lot of places specifically write it into their contracts so you have to occupy the domicile for a year.

6/30/2007 9:24:37 PM

^ Not on a re-sale around here.

Technically its loan fraud but no one could prove that you did not intend to occupy the dwelling (long as they did not read this thread ). Make sure on all the paperwork you put your new mailing address as being the property then change it after closing. You will have to sign an occupancy affidavit at closing stating that you intend to live there as your primary residence but again thats not a big deal.

Just don't tell your real estate agent, loan officer, or closing attorney what you are really doing because they will have an obligation to disclose it to the lender.

6/30/2007 10:07:50 PM

Sorry, I took a quick glance through the lounge before posting and obviously missed it!

But back to this question at hand (since the thread is already made ), would my job status in New York (and a lack of one in North Carolina) signal that I did not intend to live there? What if I am purchasing now with the mindset of coming back in X years to move into the townhouse?!

The term "loan fraud" sounds pretty bad...

Thanks for the replies!

6/30/2007 11:10:59 PM

i doubt they'll believe your residence is NC while you work full time in NY.

I had to agree to occupy my townhouse for at least 1 year per my loan.

6/30/2007 11:23:51 PM

It won't be a big deal and won't be THAT much more to do an investment loan then.

6/30/2007 11:48:18 PM

Quote :

"Not on a re-sale around here. "

I'm not sure what you mean by "around here", but I just bought a place near rtp 2 weeks ago and it stated very clearly in the contract that this domicile must be my primary residence.

6/30/2007 11:52:29 PM

I don't believe any lender would overlook the fact that I want to get a residential townhouse in NC while I have employment in NY!!


I believe 30 year fixed rates are around 6.3%? I believe to get an investment type mortgage, it'd be 7% - 7.5%. While its not a huge difference, it still is!

The bigger problem is actually the amount of down payment in a residential property vs. investment. (Correct me if I'm wrong here), but there are lenders offering 0% down for residential, whereas you have to put around 20% and up if you declare you want to buy a place and rent it out.

7/1/2007 12:25:11 AM

That's correct from my understanding.

7/1/2007 10:13:13 AM

i just closed on a house in GA while living in NC - i had to have a letter from my employer stating that the move in no way changed my salary/position for my situation - they also would have accepted a statement that i was transferring within the company i imagine

7/1/2007 10:57:38 AM

^^^I think you could BS past that. Most companies are located somewhere else. They are not going to dig deep enough to know you are not working for them remotely. . . they will most likely take the documentation that you have a job paying X amount and move on. Probably more of an issue is going to be that you have not started the job yet, the mortgage lender should be able to figure a way around that.

Every company I have ever worked for has had the address of the home office on the checks. That does not mean you live in that city. . . .

As far as the investment loans go I have heard of people getting 10% down investment loans, but usually at an even higher rate. The lenders figure that if you are not living in a property thats gonna be the first thing you stop paying on when you come upon serious financial difficulties. You need a roof over your head, but may not need that rental property that has been vacant for four months and already cost you a bunch of payments. They figure with 20% down they are covered in a foreclosure to recollect the money they loaned out without a deficiency.

I don't think your agent or mortgage lender is going to go that far out of their way to find information to blow this for you. Remember at the end of the day they are paid on commission from a closed transaction.

Technically it can be considered loan fraud but look at it like speeding 5 over vs. 55 over in a school zone. You are going 5 over. The loan fraud cases that people get investigated and sanctioned for involve a bunch of people in cahoots falsifying documents to with multiple properties and everyone skipping town with the cash right before the bank gets hit with a dozen or more foreclosures. You will have to sign a document saying your purchase is to be occupied as your primary residence. If you have no problem doing that then its up to you.

The main red flag that would be raised (and was posted earlier) would be if you already owned one or more properties. In this instance obviously you don't and and most people will not question your intention to live in your first home purchase.

Quote :

"i just closed on a house in GA while living in NC - i had to have a letter from my employer stating that the move in no way changed my salary/position for my situation - they also would have accepted a statement that i was transferring within the company i imagine"

I think the concern on this one is that he is closing on a house NC while in the process of moving to NY for a job in NY and does not want to get stuck with an investment loan.

7/1/2007 11:12:57 AM

dude this sounds like an awful idea to buy a property and try to manage it from 600 miles away.

Seriously, just put your money in the market. Too much hassle to manage a property for the small returns. Plus you can stick yourself with a lot of cash flow problems if your tenants aren't reliable and miss payments.

7/1/2007 1:54:42 PM