What constitutes a second home vs. an investment property?

A second home typically is at least 20 miles or more away. An example of a second home is a home that you would live in either in the summer or winter months. An investment property is a property the you would lease out and not live in. If you would like to contact me we can discuss your options.Joe Afonso jafonso@azhomerates.com

The most important difference is the fact that you collect rent from an investment property. You cannot collect rent on a second home. There is no such stated distance that a second home has to be from a primary residence.

I dont believe there is a predetermined distance. However, it needs to "believeable" to an underwritier. Typically, people dont buy a second home in close proximity to their primary residence.

Investment properties are homes in which you will NOT live, and you will be collecting rent. A second home is a home you WILL live in. A classic example of a second home would be someone who lives in a northern (cold) state, who buys a "second home" in Florida or Arizona for the winter. Second homes DO NOT have an official distance requirement. Rather, they have a "does it make sense" distance requirement. This is because second homes are less risky for lenders, have smaller down payment requirements, and interest rates equal to your main home. Investment homes have bigger down payments, and higher interest rates. Sadly, consumers are constantly trying to cheat the system by claiming an investment home is really a second home. Occupancy fraud is VERY HIGH, so Underwriting is constantly on the watch for this. Need a loan in MN or WI? Visit www.MnBestRates.com

there is no mileage distance requirement, that being said there needs to be a reasonable explanation that differentiates the two homesan example is your primary home is close to work or in a school district etc, the second home will typically be smaller and have a recreationalbenefit. Although this situation could be reversed. Second home vs investment home is an area the sees a lot of fraud so underwriters are cautiousan d need a good explanation to differentiate the two. Contact me and we can discuss the situation.thanksJohn

Hi,I have a second home with a lender, and intend to convert to investment property.Please let me know process to convert it and vice-versa.Thanks !

Yes the second home has to be a set amount from your current home. It also cannot be located in a place such as in a recreational area. Say you live in the valley behind the mountains and you travel to work to the coast. You try to purchase a home in the mountains because it is closer to work, but the underwriter will have a problem, since there are ski areas and mountains are generally recreation homes. An investment is just that, a rental property. To make a second home work, it has to be beneficial for you to acquire the home, meaning you can afford both payments and the 2nd home will benefit you in a commute to work.