It’s tough enough to qualify for foreclosure loans when you are having trouble making payments, but it’s even tougher when the property is non owner occupied. Foreclosure refinance loans, non owner occupied, have higher equity requirements and higher interest rates associated with these types of loans.
This is because it indicates that it is an investment property and the owner will not be residing in the home, making it a higher risk to the lender. Interest rates can be higher by 3/8% for foreclosure refinance loans, non owner occupied. In addition, instead of 10% equity, you are going to have to have at least 20% to 30% equity to qualify for foreclosure refinance loans, non owner occupied.
There are two types of refinancing that can help put funds in the pocket of someone looking for foreclosure refinance loans, non owner occupied. They are a home equity loan or a home equity line of credit. The home equity loan is like a second mortgage and can be used to set up a one-time disbursement of funds.
The home equity line of credit works more like a checking account, where you have a set limit you can withdraw and pay back. For non owner occupied properties the limit you can borrow is typically lower than residential properties.
If you have a second home or investment property that you want to refinance, now is a good time because the interest rates are very low. Even with the additional interest you pay on the loan, it can still be a sound financial move. In addition, if you want to take some equity out of the property a refinance can help put money in your pocket to maintain or increase the value of the home with renovations.
Don’t be surprised if you are asked for even more documentation than a regular primary residence. This is very normal now that the credit climate is more restrictive and lenders are looking closely at loans that are financing investment or non owner occupied properties.
Be prepared to spend a little more time documenting the equity, your income, and anything else the lender requests. In the end, if you have a high amount of equity sitting in a home that can’t be sold right now due to market conditions, it’s a good way to help you get monies to tide you over and pay expenses on a property that isn’t even serving as a primary home.
Hopefully, by holding on to it a little longer, the market will have a chance to turn around and you can sell the property for enough to pay off the foreclosure refinance loans, non owner occupied, and also make a small profit for yourself.