Single Family Residence (SFR)
The most common type of home listed in the MLS. Also known as single family detached, this means the home is a standalone structure with its own lot. Single family residences differ from condominiums, townhomes, cooperatives, or multi-family homes, which are all attached residences.
A condo is a unit that you own in a multi-unit complex, such as an apartment building. While each condo is individually owned, the common spaces are shared by all the owners in the complex. Condo developments are managed by a Homeowners Association that collects monthly dues, maintains operations and enforces policy.
Condo buildings are different from co-ops. With a co-op, the homeowners own shares in the corporation that owns the building, not the actual units themselves. Condo buildings have an elected homeowners association that may have members that don’t live in the building. Each member of a co-op is expected to serve on the association board at some point during the time he lives in the building. In a tenancy-in-common complex, multiple owners hold joint ownership in a unit whether they’re related or not. Different from a condo or a co-op, tenancy-in-common owners can be on the same mortgage and if anyone stops making his monthly payments, the entire building is in risk of foreclosure.
A type of home that’s usually constructed as a two or three-story unit with a common wall or walls bordering the adjacent unit. The common form of ownership is similar to a condominium project in that the property owner not only owns his or her respective unit, but also an undivided interest in any common area. Townhouse ownership sometimes differs from condominium ownership in that the townhouse owner owns the physical structure rather than just the airspace between the walls, floor and ceiling. However, in many areas “townhouse” now refers to the physical style of the structure rather than the form of ownership.
When a property is classified as “owner occupied” it receives a better interest rate than an investment property. It’s very straight forward:
- The owner lives in the property for a majority of the year.
- The property is in a location that make sense in relation to their employment and contains characteristics that suits the needs of their immediate family.
- The borrower acknowledges (on several loan documents) they intend to occupy the property. Note: “intend” does not mean, “oops…I financed this believing I would live here and now I’ve decided to buy another property near by that I’ll occupy”. Typically the lender wants the buyer to occupy the property within 30 days of closing.
A second or vacation home must be a reasonable distance away from a principal residence. Typically lenders like to see a minimum of 50 miles for distance from the borrowers home. The owner must occupy the property for some portion of the year and the property must be suitable for year round occupancy. Second home definitions can vary from lender to lender. Some will insist that a second home be in a resort area. It’s generally a little tougher to qualify for a second home–borrowers are often qualifying with mortgage payments on two properties: their primary and the proposed second mortgage.
This is a property that the borrower does not occupy. It can also be a “second home” or vacation home that is too close to a primary residence or that the underwriter does feel strong enough that it is indeed a vacation home. As there is a higher risk to banks with investment properties, the interest rate reflects the risk (the higher the loan-to-value, the higher the rate).