As with any loan journey, knowing what to expect when beginning your journey with owner-occupied loans is crucial to starting your borrowing process.Owner-occupied loans can be a great way to foray into the real estate field, especially as a new homeowner.Knowing how to utilize owner-occupied loans, while being informed with the knowledge you need can give you a competitive edge in a tight housing market.In the article below, you will find the critical information you need to be prepared for your real estate journey.6 Things Borrowers Should Know About Owner-Occupied Loans What are they?Owner-occupied loans are loans allocated toward properties where the borrower will resideAs suggested in the name, owner-occupied loans are tools for primary residents of a certain property.They allow borrowers to have an advantage in the form of cash flow for purchasing a property in a competitive market.Owner-occupied may also open doors for other benefits such as property tax cuts and homestead protection.Who are they for?Owner-occupied loans are for anyone seeking to buy a property where they will be the primary residentThis means that the borrower plans to reside in the home at least 70% of the time, which is signed in a legal agreement before the borrowing can take place.First-time homeowners, or those without robust personal financial history can especially benefit from this loan.Who are they not for?Owner-occupied loans cannot be applied to any property where the owner is not the primary residentSecond homes, vacation homes, investment properties, or homes for beneficiaries do not count as owner-occupied.This is important to make note of as failure to comply with these stipulations can constitute fraud.Am I ready for one?If you are someone looking to purchase a property to reside in, along with a solid repayment plan, you should be readyLearning all about what to expect with owner-occupied loans and informing yourself with knowledge about the market can be your best bet to successfully obtaining an owner-occupied loan.How does the application process work?In most cases, the potential borrower will find a loan office, who will match them with a potential investorFor owner-occupied loans, lenders will look at things such as debt-to-income ratio and credit history (although this does not matter as much compared to conventional loans).Lenders will want to see a substantial down payment in order to see commitment from the borrower, usually around 30% money down.Any loan limits?As with FHA loans, owner-occupied loans do have limits, and largely rely on how much down payment and proof of income/savings a borrower can offerIn order to establish a reasonable limit for your home-buying process, companies such as JMJ Funding can help you through the process.With over 28 years of successful lending relationships, JMJ is your source for a smooth owner-occupied lending process.
