Understanding Non-Owner Occupied Loans
What Is a Non-Owner Occupied Loan? Non-owner occupied loans are a class of loans used in mortgage origination, risk-based pricing, and housing statistics. They are usually for one to four-unit investment properties. Basically, a non-owner occupied property is exactly what it sounds like: The owner is not the occupier of the property Non-owner Occupied Loans aren’t usually used for multi-family rental properties, such as apartment blocks or complexes, and any commercial properties. Why do we need the Term Non-Owner Occupied Loans? Real estate lenders need to accurately classify property to determine the interest rates they will charge to borrowers and ensure that they are compensated for the risk they take when lending money to purchase it. A mortgage on a property that is not owned by the owner might have a higher interest rate than one on an owner-occupied home. Because non-owner occupied property borrowers are more likely to default on mortgages. Some borrowers will att