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Roger, Lawyer
Category: Real Estate Law
Satisfied Customers: 30903
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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I am qualified for a second home loan on a property that I

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I am qualified for a second home loan on a property that I am going to purchase and rent out. This will not be my primary residence, it will only be used as a rental. I was confused that our lender wants to make to it a 2nd home loan vs. investment property loan. What is the type of liability associated (tax or otherwise) with this type of loan vs. an investment loan since I am just renting it out? I understand that the rates would be different, but I want to make sure this is okay to get it as a 2nd home loan and not an investment loan. Thanks.

Kirk Adams : Hi - my name is XXXXX XXXXX I'm a Real Estate litigation attorney. Thanks for your question. I'll be glad to assist.
Kirk Adams : The real estate taxes/tax consequences should not be different. Really, the only difference is going to be the type of mortgage loan the bank provides and the insurance coverage you need.
Kirk Adams : The only thing that should concern is that a second home loan must be for an investment property that you intend to have for your exclusive use - - even if you just spend weekends there. You'll have to sign a rider and agreements that this is not going to be a rental - - thus, if that is your intention, you should discuss it with the lender as you don't want to be required to certify that this isn't a rental with that being your sole intention.
Kirk Adams : If the property is a rental property, you would usually have to get an investment loan -- which carries a higher interest rate.
Kirk Adams : IF the lender is willing to give you a second home loan when it's actually a rental you should make sure that your loan documents should state that, and you should avoid signing anything that says you agree that the property won't be rented.
Kirk Adams : The lender may not care, but you need to be sure that what you sign does't misrepresent what you're going to do.

Ok. Thank you very much for your assistance. This is kind of what I was thinking, but it's nice to hear from a real estate lawyer. We will talk to our mortgage broker to clear this up.

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