My wife and I are not getting along, but we do not want to get a divorce for financial and religious reasons. I have enough cash for a down payment and was approved for a mortgage to buy a small house from foreclosure here in Dallas. But get this: the bank is now asking me to send them a letter explaining why I am moving there. Do I tell them the truth or that I am interested in fixing and selling the house as an investment? Honestly, I think it is none of their business!
This does sound kind of nosy, and I am no fan of the bank’s Gestapo-like lending policies when they were out there buying/selling Credit Defaults etc. before the bust. But I think it has to do with how they will classify and subsequently sell your loan on the secondary market, which is what banks do to keep the money flowing. Say you’re buying to fix and flip, it will be classified as an investment property which will have a different rate (higher), down payment requirement and guidelines for approval. If classified as a second home, your rate and other qualification guidelines will be closer to primary residence guidelines BUT! the vaca home property is usually located in a resort area or development at least 50 miles from your home. If you are buying a vacation home two miles from your primary home, yes, that may look a but strange. I would think legally the bank cannot consider your marital difficulties in their decision and deny you credit, but I am eager for and welcome the experts in the audience to weigh in on this.
It looks to me like this IS an investment property — an investment in your marriage! If living apart for awhile saves it, you will have avoided costly lawyer’s fees and damage to your family. I also predict we are going to see more situations like this down the pike as Baby Boomers become empty nesters and re-write convention. And buying real estate is a whole lot cheaper than a divorce!