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Old 09-11-2014, 05:54 PM   #1
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Boat as primary residence

So according to our boat finance company, banks will no longer lend to folks who want to live aboard their boat and call it their primary residence.
Has anyone else been in this situation?
Our house is on the market, we are going to sell everything and be free of "stuff", and a mortgage. So because it's not a piece of property, we can't get the loan amount that we would like? Hmmm? So if we buy a double wide trailer and call it our primary residence but have a 53' Trawler for pleasure, that would work for financing????
The loan company is referring to the Dodd/Frank Bill that was passed and actions taken by the Consumer Financial Protection Bureau after the market crashed.
I would love to hear anyone's 2 cents on this one!
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Old 09-11-2014, 06:09 PM   #2
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So don't tell them you are selling the house or living on the boat....Just say'in
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Old 09-11-2014, 07:28 PM   #3
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Keep in mind a house is considered real property and a boat is considered personal property very similar to an automobile. Typical real estate mortgages have a duration of 15-30 years. Typical personal property loans are 3-7 years. A piece of real estate can not be moved and the lender gets a security interest in it. A boat can be taken to other states and even other countries causing all kinds of legal issues if there is a default. The security interest in real property is much higher than personal property. A house normally doesn't depreciate much whereas boats depreciate rapidly, specially if not maintained. It is much easier to sell real estate than a boat. Just check out Yachtworld and you will see boats that have been for sale for years. A lender is concerned about the ability to sell his security interest in property quickly. We could go on and on about differences in real and personal property but the main point to be made is be sure you are trying to finance a boat as personal property and be sure you have adequate assets besides a boat that is subject to depreciation if you want to get the loan. Going to a mortgage company to finance a boat won't get you very far. You will need to deal with finance companies that specialize in boats. Expect to pay much higher interest rates than a home mortgage for a boat....maybe in the range of 9-10% depending on your credit rating.
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Old 09-11-2014, 07:32 PM   #4
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I never saw any purpose for informing them it was a primary residence and anyway, they never asked. Easy enough to get a land based legal permanent address.
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Old 09-11-2014, 07:46 PM   #5
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I never saw any purpose for informing them it was a primary residence and anyway, they never asked. Easy enough to get a land based legal permanent address.
Sure are a lot of people that "live" in Green Cove Springs, Fl. Go to St. Brendens Mailing Service and see their program. Best thing I did since moving aboard, but will not help with a mortgage, or maybe it will, certainly will help in other areas involving with live aboard discrimination we experience. Got an address, static, apt # and from all appearances dirt house.
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Old 09-11-2014, 07:57 PM   #6
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We used Escapees in Livingston TX; really good service;caters to the RV crowd but perfect for boaters too. In my case, since we were already Texas residents, could just keep my driver's license, registrations, etc.
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Old 09-11-2014, 08:56 PM   #7
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So according to our boat finance company, banks will no longer lend to folks who want to live aboard their boat and call it their primary residence.
Has anyone else been in this situation?
Our house is on the market, we are going to sell everything and be free of "stuff", and a mortgage. So because it's not a piece of property, we can't get the loan amount that we would like? Hmmm? So if we buy a double wide trailer and call it our primary residence but have a 53' Trawler for pleasure, that would work for financing????
The loan company is referring to the Dodd/Frank Bill that was passed and actions taken by the Consumer Financial Protection Bureau after the market crashed.
I would love to hear anyone's 2 cents on this one!
Stories like this are common. The problem is that while some lenders won't lend, others do. Some do knowingly and some don't even ask the question as they don't care. Just find another marine lender.

And they will require you to get the boat documented so they can have a mortgage on it.

Now some lenders do require greater down payments but so much depends on your credit.

The act does try to eliminate some predatory practices and establish standards for mortgages. That's really designed to keep from having all the foreclosures and having all the banks insolvent as we've just experienced.
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Old 09-11-2014, 10:42 PM   #8
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Shop around until you find a lender who will. If we're talking a relatively small loan then I'd agree with the other posters, might as well not tell them - but if you want mortgage interest deductibility that comes with a first (or second) home, then you just find a lender who is willing.
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Old 09-12-2014, 12:27 AM   #9
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Shop around until you find a lender who will. If we're talking a relatively small loan then I'd agree with the other posters, might as well not tell them - but if you want mortgage interest deductibility that comes with a first (or second) home, then you just find a lender who is willing.
Wait a minute...

A slight correction.

Mortgage interest deduct-ability is about the boat, not the loan.

If it has a place to go to the bathroom, cook, and sleep then the interest is deductible under US tax code.
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Old 09-12-2014, 01:30 AM   #10
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Huss-as far as I am aware, and I have spent some time researching it for clients, Dodd-Frank should have little to no effect on marine lending. Tah said, because of the increased reporting requirements, some quite small banks have left the auto loan market. this would affect their position in the marine market as most smaller lenders look at boat loans as akin to auto loans. Those are not the lenders you need for a 53' trawler. The differences between personal and real property have been adequately described here, and B&B has touched on the marine mortgage. In short, for any documented vessel, the lender is entitled to a marine mortgage, registered with the CG documentation records. Any lender experienced in marine lending will require you to document the boat. This take the foreclosure process out of state courts, and puts in under federal maritime law in the Federal courts. Much more advantageous to the lender and a very simple and easy process to chain your boat to the dock. As was noted, because boats are personal property, even with maritime liens, down payments are generally higher, interest rates a higher and loan terms are shorter. If I were you, I would seek out experienced marine lenders to place a loan, someone like Essex Credit is a good start.

Good luck!
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