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Answer by David Dickinson:I'm not aware of any rule that is triggered by a distance from the primary residence. Perhaps this is a state or contractual issue?
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Answer by Jim Bedsole:This subject was brought up in one of the forums in Bankers' Threads and I responded that I thought it must be a secondary market issue. Afterward, I spoke to our mortgage manager and he said there isn't any hard and fast 50 mile rule, but that if the second home was within 50 miles of the primary residence, there would be some really hard looks as to whether the purchase made sense logically as a second home or whether it was really investment/rental property being disguised as a second home for more favorable financing options.
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Answer by Barbara McGuire:I too have never heard of a 50-mile rule. As to financing, It would be whatever they can get whether it's a second home or investment property. On that thought, I've never seen a vacation home get a more favorable rate than investment/rental property, unless this is a particular state issue like David mentions. Consumer loans generally don't do as well as commercial loans rate-wise. I'd say the financing differences would be whatever the lenders in the area make it out to be.
First published on BankersOnline.com 9/11/06
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