What factors should we consider to distinguish a second home vs investment property

This is an easy one. A second home, sometimes called a vacation home, is a home that you buy that you intend to use periodically as your residence. Examples are buying a home here in Beautiful Arizona to live in during the winter months, because you are tired of shoveling six feet of snow to get to the store, and since we don't get snow, you want to live here in the winter and then go back home before the brutal summer months of 100+ degree temperatures. This home would be lived in periodically by you as well as your primary residence. This is a home that you are not allowed to rent out EVER, as the loan agreements generally prohibit renting the property. Underwriters will not allow an individual to buy a second home in the same geographic area as the primary residence.An investment home is one that you do not intend to live in, but instead rent it out some or all of the time to others. The advantage of a second home is that interest rates are generally as favorable as those for a primary residence, whereas investment property tends to be more expensive. As for tax deductions, in a vacation home, you are allowed to deduct property taxes and interest expense similar to a primary residence, with certain limitations for high income earners. Investment property allows the deduction of operational expenses, including taxes, interest, insurance, repairs and maintenance as offsets to the rental income. The type of loan you get (second home vs investment property) is going to be determined by your intent. If you intend to rent it, it's investment property. If you intend to occupy it periodically as a second residence and not rent it out, then it's a second home. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Certified by the National Association of Mortgage Professionals and Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

For lending purposes any non-owner occupied property requires a greater down payment and higher credit scores than an owner occupied property.Rates are slightly higher for investment or 2nd homes but not significantly.The biggest bump is down payment requirements and scores.For example, an owner occupied purchase can be made with a 640 score and only 3.5% down. Plus the seller can contribute up to 6% of the purchase price towards closing costs. An Investment property requires 20 to 25% down plus closing costs and scores need to be at least in the 700s to be considered. Call me for more details. 216 337 7520 Ray

There used to be a 50 mile rule back in the day. but it had to make sense, i.e. you have your primary and live inland, but bought a house on the water where you dock your boat and go boating on the weekend and reside there, that would be acceptable and it is possible to rent that seasonally.