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Hi all,
Just got conditional loan approval for my 3rd property. Lender asked for (in addition to a few other things):
Provide a letter of Motivation/Intention explaining motivation for purchasing a new primary residence and outlining plans for current residence.
I've never had to do this before. I understand them wanting me to document my intention for my current residence (rent it instead of sell it, have tenants lined up, etc)...but motivation for purchasing a new primary residence? Like, I wanted more closet space?
Hi all,
Just got conditional loan approval for my 3rd property. Lender asked for (in addition to a few other things):
Provide a letter of Motivation/Intention explaining motivation for purchasing a new primary residence and outlining plans for current residence.
I've never had to do this before. I understand them wanting me to document my intention for my current residence (rent it instead of sell it, have tenants lined up, etc)...but motivation for purchasing a new primary residence? Like, I wanted more closet space?
Or are they looking for something more vague?
TIA!
3rd property, as in you own two now and are purchasing a 3rd? If so, they are just trying to make sure that the subject property is truly going to be your new primary residence as opposed to a property that you are going to rent out.
It does seem crazy that underwriters ask for these explanations, but if it's more closet space that's motivating you, state that! There are no wrong answers (except something along the lines that you're not really moving in and plan to rent it out right after you close). Lenders can't seem to CYA enough these days and it can be really frustrating for a buyer to jump through these silly hoops. Just take a deep breath and do as you're asked. Hopefully you'll have your clear to close soon.
I had a borrower purchasing a house in the heart of the historic district on a postage stamp sized lot and the UW requested a letter from the borrower stating he was not purchasing the property for agricultural purposes. I am not kidding.
Cash-out refinance has five accounts being paid off marked as such on the application, in system, monthly statements for each account in file. Underwriter reviews application and statements.
Borrower had to write "I am doing this cashout loan to pay off the five accounts that are marked as such on my application, and for which you have recent monthly statements."
Or how about "The only credit inquiry on my credit report is the one that you pulled in accordance with the mortgage loan that I am doing with you right now."
"My spouse has 100% access to the funds in the accounts on which I am also listed."
It's a warm and fuzzy of reassurance you won't lease out the home you are buying. I have a couple that amassed their REO portfolio by buying homes, living in them for the minimum required time and then they moved on. Well within the letter of the law.
But any reason can be given: Better school district all the way to floor plan. It doesn't matter what you say as long as it makes sense.
"I am purchasing this home as my personal residence and intend to maintain it as such"
This is almost verbatim from my motivation letter. (I redacted the address)
One sentence and my signature. It must have worked because I am approved to close.
I love the examples posted by phftex.
I had to explain, in a letter, a credit inquiry made by their third party researcher--that is funny to me, so I laughed and wrote: "the inquiry by xxxx on yyyy was made on behalf of the mortgage broker I am using to purchase a house at 123 zzz lane".
I didn't want to get too witty, but knew they would figure it out...there are drones in every operation and maybe some touching the file have no idea who does their credit research, so a letter of explanation is just that.
My advice is to ask the LO or send your best effort and see if it works. They will come back to you if it doesn't meet the regulatory requirement.
I send the same documents to the same people 3-4 times. I didn't sweat it or get frustrated--they are managing many files--I am managing one, and in my world, it is the most important.
Thanks so much for your replies. Now I understand why they are asking. I am buying a 3rd property in close proximity to my 2nd.
Here's what I wrote, but haven't sent yet:
We are writing to provide you with a statement of our motivation/intention for purchasing the property at [redacted] as requested.
We intend to reside at the new property full-time and indefinitely. We desired a yard in which our children could play and bigger bedrooms for the children to grow into. In addition, I predominantly work at home, so I needed a separate office space to accommodate this.
Our intention for our current property at [redacted], a townhouse, is to rent it as an investment, for at least 10-15 years. The money from selling this property will go toward our children’s college tuition, should they choose to attend.
Our intention for our vacation property in [redacted] is to keep it for our personal enjoyment and we have no plans to rent it.
Please let us know if you need any other information. Thank you for your time and consideration.
Although the formatting is better on the actual letter haha ^^
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