Profile picture for phone3

can i buy a second home under primary residence and let my daughter and granddaughter live there?

  • November 16 2010 - Roseville
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Answers (12)

You can only reside in a place. If you bought your home with other than a conventional loan, then you cannot use a government supported program to buy a second one. Who lives in the second house is not an issue, it can be vacant.  You can give your money to your daughter and grandaugther (if 18 or older) and be a cosigner so the  home can be titled under your daugther  and/ or GD. You could possibly claim the mortgage only if your daughter doesn't claim it.This question is better answer by a professional accountant.
  • November 19 2010
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These contents are pretty interesting, some even say you'll go to jail for multiple years! For what, buying a second home and letting family members live in it?

So long as your don't purposefully, or unknowingly when you should have known, misrepresent any facts on your loan application there is no fraud. Just be honest with the mortgage professional you are working with, don't say that you are going to be moving to the property and living in it as a primary residence, and you're not doing anything wrong or committing any kind of fraud.

Greg

  • November 19 2010
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Fraud...with a capital P, for prison.  5 years worth.
  • November 18 2010
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Phone3,

I agree with the respondents who believe you'd be risking mortgage fraud in this case.  Yes, there can be exceptions to calling this an investment, but generally it is not the core issue when the question is asked,  The core issue is, can I get a primary mortgage interest rate on something other than a primary home?

The answer to this can be "yes," but not always without consequence or cost.  If you had planned on making a 25% down payment, for example, you can sometimes "buy out" the difference between primary and non-owner occupied (N/O/O) rates and it may just cost less than you think.  Sometimes, it's an entirely acceptable compromise and when the alternative is mortgage fraud, it can be viewed as downright cheap.

If you have questions or need details, let me know.  There are good ways and bad ways to arrive where you want to go.  I can help you with the first ones.
  • November 18 2010
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You would not be able to call it a "primary" if you are not going to live in the property.  You can purchase it as a 2nd home, interest rates are pretty much the same as owner occupied but you are subject to a greater down payment.  The down payment requriement for a 2nd home may be as much as 20% down.  If your daugher is credit worthy she could buy the home as a primary residence and your income and assets could carry the loan as a non occupant co-borrower on FHA.  The down payment on FHA would only be 3.5%.  You definitely have some options here, it just depends how much you would like to invest as a down payment.
  • November 18 2010
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Yes and no, you can buy it as a Second Home, as you called it in your question, but you would not be able to consider it a primary residence for mortgage or IRS purposes. 

When purchasing the property the difference between a Second Home and an Investment Property is huge. A Second Home has a significantly lower rate (and payment) that is very close to that of a primary residence and requires a much lower down payment when compared to an Investment Property as well.

If you are truly buying a Second Home, and not buying it to use solely as an investment/rental, it would probably qualify as a Second Home. Some lenders may have some questions however if the home is very close to your primary residence, especially if it's about the same condition/size. That is a red flag that someone is trying to get Second Home interest rates on an investment property. But if it is many many miles away there should be no problem.
 

  • November 18 2010
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Profile picture for Mills Realty
You can only have one primary residence.  
  • November 16 2010
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Profile picture for wetdawgs
In regards to the suggestion of calling it a "second home", here is the IRS publication defining second home.
  • November 16 2010
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Profile picture for 2000Jetta

Given the legal issues with mis representing the facts on the mortage, have you considered buying it as a 2nd home.  You can still deduct the interest and taxes on your tax return.  Also, have you considered being a co-Buyer with your children by creating a Shared-Equity transaction? 

  • November 16 2010
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Profile picture for wetdawgs
Your primary residence is where you live for 6+ months of the year, use as your driver's license address, your tax address etc.  

As you aren't proposing to live there, you'd be committing mortgage fraud to call it your primary residence.
  • November 16 2010
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Profile picture for sunnyview
It is not a primary residence unless you live there too. Buying a house for your family is very generous, but it can really cause a lot of family problems. Please think it over.
  • November 16 2010
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No, that would be considered mortgage fraud if you were using a mortgage to purchase the property.
  • November 16 2010
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