Undefined, and a BS detector catches the fraud most of the time. Underwriters are allowed, and encouraged, to use google and common sense.
Someone wants to buy a "second home" that's a 45 minute drive from their primary residence in a C- neighborhood? BS alarm goes off. No way. That's a rental property. Do not pass go, do not collect 225 basis points, etc.
You, living in Scottsdale, Arizona, in the desert, want a vacation home near beautiful Lake Tahoe, so you can water ski in the summer and snow board in the winter? An underwriter unfamiliar with Lake Tahoe can google "why is Lake Tahoe an appealing vacation destination," read the results, and it makes perfect sense why you might want a "second home" at that destination.
The table below provides the requirements for second home properties.
must be occupied by the borrower for some portion of the year
is restricted to one-unit dwellings
must be suitable for year-round occupancy
the borrower must have exclusive control over the property
must not be rental property or a timeshare arrangement
cannot be subject to any agreements that give a management firm control over the occupancy of the property
Incidentally, it reads to me like a model match for places that you're going to have as a furnished rental or airbnb part of the year, and a spot for your family to vacation for part of the year too. Rental income from the place you are buying cannot be counted, however.
Undefined, and a BS detector catches the fraud most of the time. Underwriters are allowed, and encouraged, to use google and common sense.
Someone wants to buy a "second home" that's a 45 minute drive from their primary residence in a C- neighborhood? BS alarm goes off. No way. That's a rental property. Do not pass go, do not collect 225 basis points, etc.
You, living in Scottsdale, Arizona, in the desert, want a vacation home near beautiful Lake Tahoe, so you can water ski in the summer and snow board in the winter? An underwriter unfamiliar with Lake Tahoe can google "why is Lake Tahoe an appealing vacation destination," read the results, and it makes perfect sense why you might want a "second home" at that destination.
Lenders watch this area pretty close so as not to be involved in mortgage fraud. Mortgage fraud is not a good place to go.
I have had a number of 2nd home/vacation homes become rental properties. It has almost always been stated that if the original purpose was truly as a 2nd home but due to circumstances the purpose gets changed things are generally OK. Circumstances should be something real like health, financial change, divorce, death etc.
The properties I have seen change purpose have never had a loan called due etc that I know of but you don't want to be that one case someone decides to chase.
Lenders seem to have lots of data anymore, we see them watching utility billing etc to determine occupancy.