Profile picture for manoogim

definition of two-family house

i am looking to refinance and i searched quotes on zillow. the property is a 2-family dwelling located in massachusetts. one unit is upstairs, another unit is downstaris. totally independent apartments with separate utilities. on zillow when i search for the rates, i do not see anything that says 'two family',so the closest thing =townhouse. this is understandable b/c a lot of people outside of mass do not know what  a 'multi family' building is. the results is  excellent  namely rate=3.875% fees= $324. i like the deal and i proceed with the provider. ..... a few days later he gives me the following estimate: rate = 4% fees=$2845.  my bubble is burst and i ask for the explanation and the broker says the following.  there is a drawback with zillow rates that everyone knows about. namely 'two family' building does not exist on the menu. fanie mae automatically adds 1% for being investment rather than primary residence and 1.75% for being '2 family'. maybe it is the other way around (not sure)  but the total is 2.75% markup mandated by the government. i am not totally buying this explanation and now i am asking the zillow community if this is true
  • August 27 2012 - Watertown
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (5)

Profile picture for manoogim
thank you to all who replied. i wasn't questioning the fact that rates are higher for the investment property . also i am aware that the property type affects the rate: single family house, condo, multi-family house... etc. i am totally NOT arguing the fact that there is justification for the lenders to charge higher rates for multi-family, which also happens to be an investment property. my point was, if in the zillow search form i entered correctly that this is an investment property and this is a multi-family house, then i am going to expect that the resulting list of quotes has taken that into account. so if the quote is displayed as APR=3.875% and fees=$324, then i am going take that byte and chose that lender. a few days later, that same lender presents me with the 'final estimate' of rate=4%, fees=$2845. his explanation for the difference? fannie mae mandates 1% + 1.75% markup which wasn't taken into consideration on zillow, b/c it couldn't be taken into consideration on zillow. if this is true, then a lot of quotes on zillow from a lot of lenders will be totally bogus.
  • August 28 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for BrutallyHonest
It's true. You own a multiple family home. As in more than one unit. A portion of the home is rented out, therefore increasing the risk to the lender. Tenants do not care for a property like owner's. A town home is usually a 1unit property that is attached to other 1 unit properties, but not always. Each unit has a separate deed similar to a 2unit condo.
  • August 28 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

For lending purposes its usually considered a 2 family residence if there are 2 full kitchens on the property.
  • August 27 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for wetdawgs
Are you living in one of the units, or are both rented out?   Investment rates are indeed higher than rates for primary residences.

In the mortgage quote request, there is the option to say if it is an investment property.   You are right though, it doesn't give the options for 2 unit (or more)

  • August 27 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

I wouldn't say "everyone knows about it", but it is true that the majority of multi family housing is used as investments property, therefore I can see where Zillow pricing could make that assumption.  And the increase in pricing is standard for multi family investment properties.  However, if you live on one side of the 2-fam, you would qualify for owner occupied rates.  It will still be higher rates/fees than a single family, but at least you don't have the investment property add-on.
  • August 27 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.