For a property to be considered a residence for a loan...?

marys1000February 11, 2009

This may vary somewhat by area but I'm wondering what the dividing line is between buying land; at an increased loan rate and 15 years tops

vs. buying land with a "residence" at a lower rate and option for 30 years.

Seems like in the city if you buy some bombed out repro that's basically unliveable, the bathroom doesn't work etc., you are still getting the "residence" rate (or is that not true?)

So....if you buy acreage in the country with a 1 room hunting cabin, no electric, no bathroom, is that considered a residence? 4 walls and a roof?

Or there are a lot of places that have a totally ancient travel trailer, some version of a septic, well, maybe electric - does that meet the standard of residence?

What is the rule of thumb? If there is one.

Thanks

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fayemarie

I don't believe there is a rule of thumb . I know in my area , most banks do
not consider mobile homes real estate . My property is 11 acres and it had
2 mobile homes (rented out) , 2 large steel buildings and of course wells and
septic . I had planned to use the buildings for my construction business and
continue to rent out the trailers . Therefore , I had to get a commercial loan
that amortized over 15 years . So it does depend on the use of the property
also .

    Bookmark   February 12, 2009 at 3:06AM
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marzhere

We recently bouught the acreage in the country with a 1 room hunting cabin, no electric, no bathroom (4 walls and a roof) that you mentioned, located in CO and it is/was not considered a residence (doesn't even count as a second residence, LOL).

BTW, we also have not been able to get insurance on the property because of the no electric and physical location of the property.

    Bookmark   February 12, 2009 at 11:15AM
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kec01

In the last 2 cities in which I've lived, when people go through the approval process for building new garages, the one thing they absolutely cannot have in the garage is plumbing and the facilities that go with it. The building codes have assumed that plumbing makes a place habitable and if you have a garage with plumbing, you technically have 2 residences on one lot.

I'd say functioning plumbing is the dividing line but don't know if that applies in your area, though.

    Bookmark   February 12, 2009 at 12:05PM
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pamghatten

A Lender requires a property to be habitable year round for a residential mortgage. A "bombed out repo" that is not habitable would only be eligible for a rehabilitaion loan. A country cabin with no utilities or bathroom would not be eiligble for a residential mortgage.

Ancient trailers are not eligible either. HUD will mortgage mobile homes, but there are strict requirements for when the mobile home was built, foundation, and other amenities.

Lenders do not want any home that is in need of major repair, unless the loan is for rehabilitation, becuase the Lender doesn't want to end up owning a home that needs major repair.

    Bookmark   February 12, 2009 at 12:08PM
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muddypond

If you do not intend to make the property your permanent residence or it is not livable, the lender will not grant the favorable rate. Some people used to cheat on this, and some mortgage brokers winked at it. That isn't likely to happen any more.

    Bookmark   February 12, 2009 at 1:12PM
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marys1000

"It" would be a vacation....spot. Many people in my home state buy vacant land, put down a cement pad (or not) and park a travel travel on for weekends, the summer, hunting season, year round whatever. Sometimes as time wears on they may run electric to plug into. They may put in some sort of septic, eventually maybe a hand pump or well.
Or they put up a tool shed, sometimes the tool sheds morph into "cabins", with or without amenities. I've seen stick built additions on mobile homes and roofs with porch extensions built over mobile homes to help with snow load, tree litter and leaks.

The variety for sale out there runs a huge gamut (still amount of vacant land but more with this wide variety of hunting camp crap on it, especially if your looking at river or lake property) and I'm trying to get a handle on what the financial ramifications are on loans. Monthly payments are important to me. I suppose there may be tax considerations as well but I don't know what they are.

    Bookmark   February 12, 2009 at 4:40PM
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