Bank wants explanation why I need SECOND home, common???

I want to buy a house on my street as a primary residence and rent out my own house but bank/underwriter requested a written statement WHY I want to move into that house as opposed to the one I already live in since both are same in size.
My major motivation is that price is lower for the house I am buying, I can take advance of lower price and it has better interior design.
Otherwise bank wants to see it as an investment property rather than primary home which increases my mortgage rate, down payment, and everything.

How to convince a bank that it's going to be my primary home? Is such letter request common? Thanks.

Thanks Mountain Top -
BUT would it convince the bank? Would lower price and better interior design convince them?

The situation you are describing is increasingly common. Banks are getting people who are buying two second (vacation) homes on the same block, loans being sold to them by different brokers at the same time.

Occupancy is a major source of fraud right now. Everyone seems to think it's perfectly ok to lie to the banks about their intentions on living in a property, so they can save money on rate and downpayment and have worse credit but still qualify.

I've had to jump through hoops for all my clients when they currently own a home, don't sell, but want to buy a new one in the area.

The presumption is that you'd only move to improve your housing situation. So common red flags are a smaller or inferior home as the new one.

And banks can and do check your occupancy after closing. At closing, you'll likely be required to sign an occupancy affidavit swearing that you'll move in within 60 days and stay for 12 months. Lie on that and you're automatically in default on your loan, they can foreclose on you and sue you, and submit you for prosecution as well.

If you're truly intending on moving into the new place, do your best to put your intentions on paper, sign it, and cross your fingers. Talk about your plans to rent your current home. Start marketing for tenants and show them the ads. If you're sincere, you should find a way to get that across. If you're trying to scam the system, I highly encourage you to rethink it.

Yes, such a request is common. As you already stated, rates are higher for an investment property.

You've just stated why you wish to move. Tell them as well.

Exactly as last poster and yourself already stated. They basically need written proof to underwrite the loan as a primary residence as opposed to an investment property, which increases the risk, rate, and might require a larger down payment as well.

Your letter will be the evidence they need, but also for them to protect themselves in the future against fraud. ie if you don't live there and rent it out and default on the loan, your own letter be the evidence they need to prove that you provided false information on your application.

You are going to need to finance one of them as the investment property. However, you really can't pick and choose. You need to refinance your current residence as an investment to free up your primary residence status.