4 Property : Primary/Vacation (Husband-Wife - Separate buy) Poss?

11 Replies

The scenario is as follows:

Husband - only on initial 2 properties mortgages with bank. Wife currently does not have 2-year work history & not on mortgage.

1. Husband owns 1 property solely and only on his name as his primary residence - rented it out later. Wife signed the quit claim deed and husband is the only one on title.

2. Husband about to close on a 2nd property - vacation home and loan/mortgage is only on his name. Husband wants to keep the title only on his name. Reason: this will keep wife's name out of any public and property records and then later wife can buy 2 homes - 1 primary and 1 vacation home by having her name on mortgage and also including husband funds on mortgage and either have "JUST HER name on title" or have her+ husband name on her next 2 properties.

3. Wife buying a primary home just with her name on the title.

4. Wife buying a vacation home just with her name on title.

Reason for doing this entire effort is to ensure lowest possible interest rates and legally be able to own 4 houses: 2 per spouse. 

Am i missing something or does it matter to banks/lenders in whose name the property has been purchased before to avoid getting an "Investment loan" which is at a considerable high percentage interest rate? All i know is that one person can have two homes at lowest interest rates: primary and vacation home.

@Varun Parkash I am very confused by the description here.  If you are buying your primary home, it doesn't matter if your name is on any other properties.  If you owned 100 properties, all with your name on it, and you wanted to move into a new home that you would occupy, then you would qualify for primary residence terms.  Does that make sense?  

If I am missing something from your post please let me know.  Certainly willing to help as much as possible.

Originally posted by @Andrew Postell :

@Varun Parkash I am very confused by the description here.  If you are buying your primary home, it doesn't matter if your name is on any other properties.  If you owned 100 properties, all with your name on it, and you wanted to move into a new home that you would occupy, then you would qualify for primary residence terms.  Does that make sense?  

If I am missing something from your post please let me know.  Certainly willing to help as much as possible.

 HI Andrew, thanks for the response. I thought that Lender holds us accountable for any property that was previously purchased as "primary residence" and then later "rented out" as a primary residence loan which is only allocated one time.

What are the rules around "vacation home"? How many vacation home could an individual purchase under the loan terms of "Vacation Home" by a bank? My assumption is ONE per person.

@Varun Parkash admittedly, I cannot speak for every lender here.  And it would be pretty time consuming to talk about every loan type for this but most lenders/loans will start questioning secondary homes if you are buying more than 1 per year.  The requirements of the second home according to Fannie Mae are:

  • 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
    • If the lender identifies rental income from the property, the loan is eligible for delivery as a second home as long as the income is not used for qualifying purposes, and all other requirements for second homes are met (including the occupancy requirement above). cannot be subject to any agreements that give a management firm control over the occupancy of the property

Hope that helps!

Originally posted by @Andrew Postell :

@Varun Parkash admittedly, I cannot speak for every lender here.  And it would be pretty time consuming to talk about every loan type for this but most lenders/loans will start questioning secondary homes if you are buying more than 1 per year.  The requirements of the second home according to Fannie Mae are:

  • 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
    • If the lender identifies rental income from the property, the loan is eligible for delivery as a second home as long as the income is not used for qualifying purposes, and all other requirements for second homes are met (including the occupancy requirement above). cannot be subject to any agreements that give a management firm control over the occupancy of the property

Hope that helps!

My question is more around these scenarios:

1. Does it matter to lender (bank) if the new property buyer is a wife who never had a title in her name in the past? It seems from your statement that a lender does NOT care about secondary home purchase if the purchase is NOT every year.

@Varun Parkash being named on the title of a property in the past has absolutely no bearing on buying any type of property.  The lender will ask about the purpose of the new property and you (or wife) will sign documentation promising that your intent is true and that any fraud will be a $10,000 fine per instance.  So just be honest and truthful and the lender will be ok with the loan.

Thanks but to get a future primary residence lowest interest loan on wife name - the wife would have to be removed from the previous title on which she did not have the loan on her name.

This is what the lender told me, as he said that the bank underwriter performs a title search on all parties first before issuing any loans

I don't know why the wife would have to be removed from title of the first primary home to buy a new primary home. That makes no sense. If I want to buy a new primary home, I would still keep title on my current primary home. I'm not forced to sell it or take my name off title. It would just be expected that I am at least moving from my first primary home into my new replacement one.

You simply have to show proof that the new primary home is indeed your primary home. The lender might ask about where the borrower's job is and such. If they know you're married, that could be a red flag that you each have your own primary residence, however, there are actual married couples with their own homes. I am friends with one of those types of couples. Not typical, but does happen.

If your lender is insistent that one must remove their name from title to get a new primary residence, get a new lender. They're wrong.

I am confused by this post as well. There is no legal limit on how many houses you can own. Are the husband and wife not living together? If the wife buys a home as her primary residence and doesn't move in that is mortgage fraud. If both spouses are trying to prove 2 different homesteads for tax purposes they would have to be very careful because that could be construed as tax fraud. I think you need to find a new lender who can explain this situation a little better. 

Originally posted by @Peter M. :

I am confused by this post as well. There is no legal limit on how many houses you can own. Are the husband and wife not living together? If the wife buys a home as her primary residence and doesn't move in that is mortgage fraud. If both spouses are trying to prove 2 different homesteads for tax purposes they would have to be very careful because that could be construed as tax fraud. I think you need to find a new lender who can explain this situation a little better. 

 The lender of a big bank today said that underwriter will need a solid reason such as a divorce, separation, refinance if the wife wants to have her name removed from the second home (that husband purchased as a vacation home) in order to qualify for the third home as her primary residence. Lender recommendation is : DO NOT add wife to second vacation home title and simply have her stay out of the home ownership mess unless she plans to buy the 3rd home as her primary residence. He said that underwriters will reject the loan and its not worth the hassle to now add her name to title and later remove it because refinance costs money and unless you are not separating/divorcing - the other reasons are not acceptable easily.

Originally posted by @Peter M. :

I am confused by this post as well. There is no legal limit on how many houses you can own. Are the husband and wife not living together? If the wife buys a home as her primary residence and doesn't move in that is mortgage fraud. If both spouses are trying to prove 2 different homesteads for tax purposes they would have to be very careful because that could be construed as tax fraud. I think you need to find a new lender who can explain this situation a little better. 

 The whole argument here boils down to the single fact of how to go about using the wife's name on title and mortgage for the 3rd home to qualify her in the eyes of bank as a "primary residence loan" holder to get the lowest possible interest rate when genuinely - she will be living with her husband in that 3rd home and is not doing any mortgage fraud. 

The lender advice has been:  keep your wife out from the first two homes titles since she is not on the mortgage of them and only use her name on title and mortgage for the 3rd home to get the primary residence loan. If wife gets her name added to the title on any of the previous 2 homes owned by husband - according to lender - she will have a VERY HARD time in removing her NAME from the title of those previous 2 or 1 homes - because underwriter will DEMAND a letter of explanation and unless the wife is GETTING separated or divorce or unless the husband is refinancing the loan = the Underwriter will DENY her letter and ALSO DENY her the "primary residence loan" that she wants to get for the 3rd home.

Is it making sense?