What may happen to rates and fees on non-owner-occupied loans?

When considering non-owner-occupied loans, it is essential to understand the risk profile these loans present to lenders. Non-owner-occupied properties, such as investment properties or vacation homes, are generally deemed riskier compared to owner-occupied loans. Because the borrower may not have the same level of emotional and financial investment in a non-owner-occupied property, lenders may perceive an increased likelihood of default.

As a result, it is common for lenders to adjust their rates and fees accordingly. They may increase these costs to offset the higher risk associated with lending on these types of properties. This adjustment can manifest as higher interest rates, loan origination fees, or other associated costs. Lenders aim to protect their interests while still attracting borrowers, which contributes to the potential rise in rates and fees for non-owner-occupied loans.

The other options do not accurately reflect the market conditions surrounding non-owner-occupied loans. For example, stating that these rates will “always be lower” ignores the added risk for lenders. Similarly, saying rates will “remain the same” fails to acknowledge the dynamic nature of lending practices in response to perceived risk. The notion that “rates and fees are not affected” overlooks how market conditions and lender guidelines adapt based on property usage.