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Differences Between Free and Clear Owner vs. Non-Owner Occupied Mortgages

If you plan to buy a commercial residential property, it is important to understand the differences between owner and non-owner occupied properties and the effects those differences can have on financing.

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An owner-occupied property is the residence of the property owner, but it’s important to note that this does not mean only a single-family residence. Most lenders will consider a building up to four units to be owner-occupied if the owner will permanently reside in one unit. Second homes are also considered owner-occupied if they are not rented, or only rented for short periods depending on the lender. If a property owner wants to convert a non-owner occupied property to owner-occupied, most lenders require that the owner resides in the property for at least a year before considering a reclassification.

Major differences between the two types of properties include:

  • Mortgage rates for non-owner occupied properties will be higher than owner-occupied. Closing costs, including lender fees, title, appraisal, and settlement agent are also normally higher.
  • Most lenders require a larger down payment for non-occupied properties. This might be as high as one-third of the sales price for non-occupied investment property.
  • Non-occupied properties are not eligible for the mortgage deduction currently allowed on owner-occupied properties.
  • Lenders require cash reserves to be held covering total property expenses, and that reserve requirement might be higher for non-occupied properties.

If you are looking for residential properties for occupied or non-occupied investment in Florida, contact the AHL Hard Money Network. We can review your property quickly and if qualified you will get your money in days versus months from a conventional lender. We also focus primarily on the property equity, making your credit or previous bankruptcies or foreclosures less critical for your approval. You need to talk with AHL Hard Money Network before going anywhere else for your commercial mortgage.

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*We do not issue approvals. We are a marketing and lead portal. You will be contacted directly by our private investors. They will call you directly to determine the value and equity in your home and to help you throughout the approval process. Each inquiry is on a case by case basis. Thank you.


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