Buy Primary Residence When You Already Own One

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Occupancy plays a key role in the home loan process.  In fact, lenders take extra steps to verify a buyer occupies the new home as they stated they will.  Buyers seeking the purchase of a primary home in the same marketplace they own another primary residence in are subject to extra scrutiny.

Define Your Motivation

Financing a new primary home within the same marketplace you currently own a primary in requires some extra explaining.  First, underwriters want to know why.   Why are you purchasing a primary residence?  The goal here is for underwriting to weed out occupancy fraud.  In other words, find out if a buyer is calling a home their “primary” to leverage low primary residence rates while using the home as a rental property.

Explain Intent for Current Primary Residence

Homeowners buying a new primary home in the same area as their current primary home must explain their intent for their current residence.  The new mortgage company needs to confirm the buyer is not “buying and bailing.”  In other words, purchasing a new primary residence and defaulting on their current home.  Typical acceptable intentions for a current primary residence include:

  • Keeping the current residence and renting it out
  • Selling the property provided there is enough equity in the property to avoid doing a short sale

By Jeremy House

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