Understanding the Different Property Types: Primary, Secondary, and Investment
No matter the type of home you wish to purchase, you can obtain a mortgage loan. However, which type of property you purchase will determine your overall investment as the property type typically affects the mortgage interest rate that you will receive as well as the down payment you will be required to make. Therefore, it is important to understand the differences between primary properties, secondary properties, and investment properties when you’re considering making a property purchase.
The Different Types of Properties
Also known as a primary residence, this is the main home that you live in. From houseboats to mansions, anything can be your primary property as long as you live in it for most of the year. These properties usually qualify for lower mortgage rates, but there are strict requirements your property needs to meet in order for it to be considered a primary property. To qualify as your primary residence, your property must be a convenient distance from your work, listed on documentation like your voter registration or tax returns, and be occupied by you for a majority of the year.
A secondary property, also referred to as a vacation home, is one that you live in for only part of the year. Typically, a secondary property may come with a slightly higher interest rate and possibly a larger down payment (10% is typical) than a primary property. You may also need a good credit score in order to purchase a secondary residence.
Typically a rental house or a condo, an investment property is a property that is intended to generate income. They usually require a larger down payment (20-25%) and come with a higher mortgage rate than the other types of properties. Investment properties typically require you to have excellent credit to finance and can be a bit trickier than other mortgage types, so it is recommended that you consult with a mortgage professional before investing.
Get the Right Mortgage for Your Property Type
If you need help finding the right loan solution for your primary, second home, or investment property, contact the professionals at Butler Mortgage. Having worked with both first-time and seasoned buyers in the Central Florida area for over 25 years, we can help you find a loan that perfectly suits your needs. For more information on our services, fill out our online form or call us at 407-931-3800 to set up your free consultation today.
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