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I've been browsing this forum for a while now but have decided to finally create an account and make my first post.
I need your help.
I am a first time home buyer. I was able to obtain a mortgage loan and got my first house a few months ago. I decided to rent out the property because living there was inconvenient due to the distance to and from work in terrible traffic. It's being rented out to this nice family but the utilities are still in my name. It's been a couple months since I've been renting it out and I don't want to be involved with the utilities anymore because I'm not the one paying them so I want to transfer the service to the people renting.
The problem that I'm having is that as I'm reading more and more and learning about real estate and such, I figured out that renting out my first home with the type of mortgage loan that I have is illegal, right??? So, transferring the utilities to someone else implies that I don't live there which could get me in trouble, right???
I don't know what to do. Should I stop renting it out? Should I just keep utilities in my name or transfer? Does it matter? What's the worst that can happen? I want to do the right thing
Sounds like you need to talk to an attorney. If during the loan agreement you signed a statement saying you intended to live there, you might not have qualified for the loan if you did not do so. Many loan companies would probably expect higher interest rates for a rental property.
I need your help.
I am a first time home buyer. I was able to obtain a mortgage loan and got my first house a few months ago. I decided to rent out the property because living there was inconvenient due to the distance to and from work in terrible traffic. It's being rented out to this nice family but the utilities are still in my name.
Change that. Tomorrow.
The problem that I'm having is that as I'm reading more and more and learning about
real estate and such... I don't know what to do.
What you *should* do... is sell.
Until then... find a lawyer who knows RE law and works with/for landlords.
Follow his advice.
OP, sorry, but it's very hard to believe that you had no idea that you were actually supposed to LIVE in the house that you bought as your very own home. That is what "owner-occupied" means. That determines the kind of loan you can get. That is in the paperwork you signed. If you had an agent, I am sure he or she told you these things more than once (unless you misrepresented yourself throughout the process). And somehow you "overlooked" all of this?
Your HOMEOWNER'S insurance (which is likely included in your mortgage loan amount, PITI) is also based on you LIVING IN the house. Insurance for a rental property is different. You could get in big, big trouble with your insurance company if anything goes wrong and you try to make a claim.
Your HOMEOWNER'S insurance (which is likely included in your mortgage loan amount, PITI) is also based on you LIVING IN the house. Insurance for a rental property is different. You could get in big, big trouble with your insurance company if anything goes wrong and you try to make a claim.
.
A claim might be denied if you are renting the home and the insurance is for owner occupied.
If the renters burn the house down, you might not have any insurance to cover it. It's easy to get the insurance switched, so do it.
Get the power changed to the renter's name. You're breaking the rule with your lender...whether or not the power is in your name or theirs.
Also if you have a homestead exemption, that should be used since you don't like there.
Your IRS taxes are done different when it's a rental home.
I've been browsing this forum for a while now but have decided to finally create an account and make my first post.
I need your help.
I am a first time home buyer. I was able to obtain a mortgage loan and got my first house a few months ago. I decided to rent out the property because living there was inconvenient due to the distance to and from work in terrible traffic. It's being rented out to this nice family but the utilities are still in my name. It's been a couple months since I've been renting it out and I don't want to be involved with the utilities anymore because I'm not the one paying them so I want to transfer the service to the people renting.
The problem that I'm having is that as I'm reading more and more and learning about real estate and such, I figured out that renting out my first home with the type of mortgage loan that I have is illegal, right??? So, transferring the utilities to someone else implies that I don't live there which could get me in trouble, right???
I don't know what to do. Should I stop renting it out? Should I just keep utilities in my name or transfer? Does it matter? What's the worst that can happen? I want to do the right thing
Most of the things brought up are valid the mortgage company can call the loan due most likely will not happen, but could if you do not make your payments on time. They would have to prove you tried to defraud them by getting an owner occupied loan.
What does the lease say about utilities? Insurance you should call them for no other resin then it will be cheaper because you only need to insure structure.
For me insuring as a rental was MUCH higher. From $800 a year when I moved in, to $1400 hundred 3 years later to $2400 now, its been 5 years a rental. If your mortgage says owner occupied then you should be living there, not someone else, and yes a claim can be denied by an insurance company for the same reason, you said you were living there, not a tenant.
After my first tenant I refuse to have any bills in my name. They took over electric but I kept the water in my name, and they ran out on the bill.
OP, sorry, but it's very hard to believe that you had no idea that you were actually supposed to LIVE in the house that you bought as your very own home. That is what "owner-occupied" means. That determines the kind of loan you can get. That is in the paperwork you signed. If you had an agent, I am sure he or she told you these things more than once (unless you misrepresented yourself throughout the process). And somehow you "overlooked" all of this?
Your HOMEOWNER'S insurance (which is likely included in your mortgage loan amount, PITI) is also based on you LIVING IN the house. Insurance for a rental property is different. You could get in big, big trouble with your insurance company if anything goes wrong and you try to make a claim.
I think you need a lawyer.
Yep. OP, you signed numerous docs at closing indicating your intent to live there under penalty of perjury. No one's going to believe that you "accidentally" bought a property too far from your job and they "oops" rented it out right after buying. You've most likely committed fraud.
For me insuring as a rental was MUCH higher. From $800 a year when I moved in, to $1400 hundred 3 years later to $2400 now, its been 5 years a rental. If your mortgage says owner occupied then you should be living there, not someone else, and yes a claim can be denied by an insurance company for the same reason, you said you were living there, not a tenant.
After my first tenant I refuse to have any bills in my name. They took over electric but I kept the water in my name, and they ran out on the bill.
I also drop my Liability Insurance of my rentals and cover every 3-5 houses on a 2 million dollar policy I get more for my dollar. I raise all my deductibles to 5k (I look at it like 5k to rebuild a house not bad) I also exempt appliances and a few other things.. This works for me but if you only have a few rentals you might not be able to afford the risk for the gain.
Move into the house ASAP and deal with the commute, figure out how to get the tenants out and get yourself out of whatever lease you are in.
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You've most likely committed fraud.
