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Roger
Roger, Lawyer
Category: Real Estate Law
Satisfied Customers: 31733
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.
Customer:

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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