I have myself confused and need a little bit of help.
We have a customer who comes to apply for a loan to purchase rental property that will be non owner occupied. (Less than 14 days)
Now the customer is a Pharmacist and this will be their first rental property. Since their primary occupation is not renting property, but is the money they earn from being a pharmacist would this still be considered business purpose?
The commentary of the regulation states:
3. Factors. In determining whether credit to finance an acquisitionâ€”such as securities, antiques, or artâ€”is primarily for business or commercial purposes (as opposed to a consumer purpose), the following factors should be considered:
i. General. A. The relationship of the borrower's primary occupation to the acquisition. The more closely related, the more likely it is to be business purpose.
B. The degree to which the borrower will personally manage the acquisition. The more personal involvement there is, the more likely it is to be business purpose.
C. The ratio of income from the acquisition to the total income of the borrower. The higher the ratio, the more likely it is to be business purpose.
D. The size of the transaction. The larger the transaction, the more likely it is to be business purpose.
E. The borrower's statement of purpose for the loan.
But I think this is for purchases that don't include rental property. Is this correct?
Thanks in advance for your help.
It is better to act cautiously beforehand than to suffer afterward.
The answers I give are my opinions. Not legal advice.