Blog

Jan 06

Client Questions with Occupancy

Happy Couple

Purchase of a Primary Residence

  • Does the client or their spouse currently own a home?
  • Is that home in the same area as the subject?
  • If yes, what will the client be doing with that home?
  • If the home is being sold, will it sell prior to closing?
  • If not, then that home will be considered retained after closing.
  • Is the subject property superior to the home being retained?
  • If not, then we will need to support why the client is downgrading from the current residence.
  • If the subject is superior, then we will still review to verify that the home meets the client’s needs.
  • If the subject is comparable to the client’s current residence, then it’s unlikely we will be able to proceed as a primary residence. A detailed explanation would be needed for consideration.
  • Does the client(s) work in the subject area or is the subject a reasonable commute from the client’s employment?
  • If the client works in an office and has a longer than typical commute (anything over 1 hour) please explain the client’s commute (e.g. public transportation)
  • Will the client occupy the home within 60 days of closing?
  • If not, the subject is not eligible as a primary residence.
  • Has the client purchased another primary residence within six months of this transaction?
  • If so, it is likely we will call this purchase an investment property.

savings

Refinance of a Primary Residence

  • Does the client current occupy the subject property?
  • If not, this will have to be investment unless new construction or inherited property.
  • How long has the client occupied the subject?
  • If the client has occupied the property within the last six months then a detailed explanation will be required and it’s possible the subject would have to be considered investment.
  • Is all of the client’s documentation mailed to the subject property?
  • If not, where does the documentation go?
  • If the client’s documentation goes to another owned property in the area, then that is likely their primary residence.
  • If the client’s documentation goes to a relatives address in the subject area than an explanation will be required.
  • Is there rental income on the client’s tax returns?
  • Does the HOI show the subject as a primary residence and cover personal property?
  • Does the client(s) work in the subject area or is the subject a reasonable commute from the client’s employment?
  • If the client works in an office and has a longer than typical commute (anything over 1 hour) please explain the client’s commute (e.g. public transportation)

Realtor

Purchase of a Second Home

  • Is the subject located within a reasonable distance from the client’s primary residence?
  • Does the subject have second home amenities (close to water or a popular vacation area)?
  • If not, explain the utility of the subject as a second home.
  • Will the client occupy the home for at least some portion of the year?
  • Will anyone other than the client and/or spouse occupy the subject property?
  • Does the client own another second home or investment property in the area?
  • If the client owns another second home or investment property in the subject area, then it’s likely that the subject will have to be investment.

investment

Refinance of a Second Home

  • Is the subject located within a reasonable distance from the client’s primary residence?
  • Does the subject have second home amenities (close to water or a popular vacation area)?
  • If not, explain the utility of the subject as a second home.
  • Does the client occupy the home for some portion of the year?
  • Does the client own other property in the area?
  • Does the client claim any rental income for the subject on the 1040s?
  • If so, we must verify that the rental income is less than two weeks?
  • Does anyone other than the client and/or spouse occupy the subject?
  • Is so, the subject will have to be an investment property.

couple

Purchase of an Investment Property

  • Does the client currently own a primary residence?
  • Does the client have a history of successfully owning and managing rental properties?
  • Is the client a first time homebuyer?
  • Does the client have liquid assets significantly higher than their annual income?
  • Is the client making a large down payment?
  • Is the client currently living rent free?

About The Author

Wells is a SOS Underwriter at Quicken Loans Mortgage Services. He graduated from Clemson University with a Bachelor's degree in Financial Management and enjoys spending time with his wife and three children.

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