Second home or investment mortgage... Please help

[David Rutledge]

Good afternoon,

I am looking at getting my first investment property out of state this summer. I do not own a property yet but the company I am getting my loan through said that I should use a second mortgage loan and put 10% instead of the 20% I would need for an investment loan. They said to do this even if I plan to rent it out.

Can anyone give me advice on whether this is actually a good idea or should I just go ahead and put the 20% and get a regular investment loan?

I am new to this and very confused.

Thanks for any help or guidance you may be able to provide.

David

[Shaun Weekes]

Is that the type of loan officer you want to do business with?

Do you intend to live in this property at any time during the year? If the answer is NO and you sign loan documents that indirectly say that you will. You're lying on your application and if it were to be ever found (It probably won't but why take the risk) It's an FBI investigation. Mortgage fraud is a serious thing.

Bottom line is there's the right thing to do, the wrong thing to do and your own way.

If you're not a shady dude, then it's clear what needs to be done. If you're a shady dude, then it's also clear what you'll do.

It's up to you Sir but I would highly recommend putting this together as an investment loan so that nothing comes back to bite you in the #$%. IT'S NOT WORTH IT!!!

Another thing you need to consider is if you're receiving rents you're supposed to file those on your schedule E. Second homes don't typically collect rent unless it's a beach house that you frequent 2 weeks a year and then rent it while you're back home.

I don't know what else to tell you David. Do the right thing.