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I want to make sure that I'm doing things ok. I plan on refinancing my house due to the low rates available.
Right now I live in it, therefore it's "owner occupied." I've lived in it since I bought it years ago. However, I'm toying with the idea of renting it out sometime in the future. The issue is that I may make it available for rent as early as the 1st of the year. I'm not sure if I will rent it out. It's just an option that I'm considering.
I know lots of people with an owner occupied loan on their houses who have later rented them out. However, they have ususally been lving in them for quite a while with their current mortgage before they offered them for rent.
Does anyone see a problem with refinancing right now as an owner occupied house and then renting it out later, perhaps as early as the 1st of the year? That would be 3-4 months from now.
I want to make sure that I'm doing things ok. I plan on refinancing my house due to the low rates available.
Right now I live in it, therefore it's "owner occupied." I've lived in it since I bought it years ago. However, I'm toying with the idea of renting it out sometime in the future. The issue is that I may make it available for rent as early as the 1st of the year. I'm not sure if I will rent it out. It's just an option that I'm considering.
I know lots of people with an owner occupied loan on their houses who have later rented them out. However, they have ususally been lving in them for quite a while with their current mortgage before they offered them for rent.
Does anyone see a problem with refinancing right now as an owner occupied house and then renting it out later, perhaps as early as the 1st of the year? That would be 3-4 months from now.
Luv2behere, if the subject property is your primary residence you are allowed to refinance it as an owner-occupied property. It all goes back to your intent at the time of the refinance. No where in the loan application does it ask you how long you will live in the property, nor does it state a time element in the note nor the deed of trust. I hope that this helps.
Luv2behere, if the subject property is your primary residence you are allowed to refinance it as an owner-occupied property. It all goes back to your intent at the time of the refinance. No where in the loan application does it ask you how long you will live in the property, nor does it state a time element in the note nor the deed of trust. I hope that this helps.
Hello, what about the certificate of occupancy that you sign in the loan docs? It states that you will occupy as primary residence within 60 days after date of closing. and that you will continue to occupy as principal residence for one year after date of occupancy? thanks
Actually, Rushin is correct, you need to pay attention to what you sign.
In most states (maybe all) the following verbiage is in the Deed of Trust, the document you sign when you pledge the property as collateral:
Occupancy. Borrower shall occupy, establish, and use the Property as Borrower’s principal residence within 60 days after the execution of this Security Instrument and shall continue to occupy the Property as Borrower’s principal residence for at least one year after the date of occupancy, unless Lender otherwise agrees in writing, which consent shall not be unreasonably withheld, or unless extenuating circumstances exist which are beyond Borrower’s control.
It's all about intent. If you were to close on Monday, and the day after, your company transfers you across country, your intent was not to rent the property. However, posting here, that you intend to rent the property in 4 months, but refinance as owner occupied, is fraudulent. Your intent was to not occupy the property for 1 year. Would you get caught? Probably not. However, never have we seen the level of fraud investigations where they are currently. If the agent that sold you the new home is part of an investigation, or, the loan officer, you could find yourself in a pickle. Or, my favorite source of whistle blowers, the jealous ex-wife, the nosy neighbor that you bragged to, or the co-worker that was recently denied a loan. You never know for sure what people will do.
I tell my (older) kids, if it would make you fail a lie detector test, cost you a security clearance, think long and hard.
Thanks for the replies everyone. It gives me some insight, but I guess I really won't know until I sign the final documents.
Some responses spoke about occupying the residence within 60 days or referred to buying the house. I don't know if that applies because we're not doing a purchase loan on a house we're newly buying. We're already occupying the residence, and have been doing it for years, so we're doing a refinance of an existing residence.
We'll just have to see what the final documents say and see where we go from there. As it stands, we're considering the idea of renting out the hosue down the road. It's not a fer-sure thing yet. It's one option for us among others. We just want to ensure we're legal on whatever we do.
That within 60 day thing is standard wording in both the Michigan Mortgage and Texas Deed of Trust (the two states I'm familiar with). You sign the same document whether it's a refinance or a new mortgage.
Would you get in trouble for moving before the year is up? I highly doubt it, but could you? Yes, sure, since you have clear intent to occupy less than a year after signing the instrument.
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