Property Use
Encyclopedia
Property Use
Pertaining to residential mortgages
and their risk-based pricing
methods, the property use is sub-categorized as follows:
A primary residence
is viewed and priced as the lowest risk factor of Property Use. There are no adjustments to pricing or rate.
A second home
is viewed and priced according to lender, some will asses the same risk factor as a primary residence while others will factor in a 0.125% to 0.5% pricing increase to mitigate the perceived risk. Lenders perceive that the borrower is less likely to value the second home
if the borrower was faced with financial difficulties.
A non-owner occupied property is viewed and priced as the highest risk factor of property use. Lenders will factor in a 0.5% to 2.5% pricing increase to mitigate the perceived risk.
Ask a corresponding mortgage broker
, mortgage banker, or retail banker for specific pricing adjustments according to property use.
Pertaining to residential mortgages
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
and their risk-based pricing
Risk-based pricing
Risk-based pricing is a methodology adopted by many lenders in the mortgage and financial services industries. It has been in use for many years as lenders try to measure loan risk in terms of interest rates and other fees...
methods, the property use is sub-categorized as follows:
- Primary residencePrimary residenceA person's primary residence is the dwelling where they usually live, typically a house or an apartment. A person can only have one primary residence at any given time, though they may share the residence with other people...
, - Second homeSecond homeSecond home may refer to:* Vacation property* Pied-à-terre* Second Home , an album by Marié Digby...
, - Non-owner occupied or investment property
A primary residence
Primary residence
A person's primary residence is the dwelling where they usually live, typically a house or an apartment. A person can only have one primary residence at any given time, though they may share the residence with other people...
is viewed and priced as the lowest risk factor of Property Use. There are no adjustments to pricing or rate.
A second home
Second home
Second home may refer to:* Vacation property* Pied-à-terre* Second Home , an album by Marié Digby...
is viewed and priced according to lender, some will asses the same risk factor as a primary residence while others will factor in a 0.125% to 0.5% pricing increase to mitigate the perceived risk. Lenders perceive that the borrower is less likely to value the second home
Second home
Second home may refer to:* Vacation property* Pied-à-terre* Second Home , an album by Marié Digby...
if the borrower was faced with financial difficulties.
A non-owner occupied property is viewed and priced as the highest risk factor of property use. Lenders will factor in a 0.5% to 2.5% pricing increase to mitigate the perceived risk.
Ask a corresponding mortgage broker
Mortgage broker
A mortgage broker acts as an intermediary whose brokers mortgage loans on behalf of individuals or businesses.Traditionally, banks and other lending institutions have sold their own products. However as markets for mortgages have become more competitive, the role of the mortgage broker has become...
, mortgage banker, or retail banker for specific pricing adjustments according to property use.