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Getting back to the original question, if your loan contract says owner occupied (usually for a year) and you breach the contract, the loan can be accelerated, the lender could demand that you pay off the loan, and foreclose if you don't. To keep from losing the property you would have to refinance to an investment property loan at a higher interest rate, closing costs all over again, and a lower loan to value so you would have to come up with maybe tens of thousands in cash to get the refinancing.
^^^ What Kim said. (But really, verybadgnome, did you think your original loan was somehow not in effect any more? ) And again, as others have pointed out, you would have to get LANDLORDS' insurance as soon as you make it a rental, and the insurance company would notify the lender. Otherwise, if you had a claim, it would NOT BE COVERED because your homeowners' insurance would not protect a RENTAL PROPERTY. I would like to think people would not take a chance on a valuable piece of property by NOT insuring it!!
The problem using homeowners on a rental is this .
Most claims would be covered and the insurer never the wiser . The problem is when it is say an arson problem by the tenant , vandalism by the tenant , theft by the tenant. Or the tenant gets sued for something they did .
In many states anyone living in your home more than a certain amount of days is considered a household member .
Regular homeowners covers household members the same as you .
Any of the above committed by a tenant is the same as an insurance job ... it is an act committed by an insured .
Landlord insurance works differently and severs that link so they are not household members .
The problem using homeowners on a rental is this .
Most claims would be covered and the insurer never the wiser . The problem is when it is say an arson problem by the tenant , vandalism by the tenant , theft by the tenant. Or the tenant gets sued for something they did .
In many states anyone living in your home more than a certain amount of days is considered a household member .
Regular homeowners covers household members the same as you .
Any of the above committed by a tenant is the same as an insurance job ... it is an act committed by an insured .
Landlord insurance works differently and severs that link so they are not household members .
I learned the difference the hard way. Lol
Well, it would be insurance fraud on the part of the owner if he tried to use homeowners' insurance to cover a rental-property claim. I suspect there are many ways the insurance company could discover this. I would never take the chance on something so valuable!!
What is it’s both a rental property and your primary reaidence?
Accessory rental unit, or renting a room. As far as the lender is concerned on an owner occupied loan, that is fine. Be clear with your home owners insurance agent to make certain of adequate coverage.
As for the OP:
As for whether this is legal or not to turn around and lease your home after signing an owner occupied Note - I am sure your attorney told you its all about intent and you signed you would live there for a year. It's one thing if your employer transfers you 3 months after you close. It's another thing if you are under contract to buy a new construction home while refinancing owner occupied.
Will the lender do anything? Depends on the lender. Most will offer you a significantly higher rate and move on with their day instead of engaging with lawyers. Lenders have some unique ways of identifying cheats (if this was done knowingly, let's call it what it is) and most occupancy fraud cases literally fall into their laps when the homeowner makes a less than bright (ie, stupid) move.
If circumstances were beyond your control, document, document, document and move on with your life. NO lender will mess with you if that can be proven.
Accessory rental unit, or renting a room. As far as the lender is concerned on an owner occupied loan, that is fine. Be clear with your home owners insurance agent to make certain of adequate coverage.
.
I should have specified, this is a multi-family home that I own and live in. Are you telling me I need to change the type of homeowners insurance I have if I move, even if I already have tenants currently?
I just refinanced my rental property in Hawaii. The requirement for my type of refinance was that I live in the property. But I was upfront that I did not live in the property (though I plan to return to the property in less than 2 years) from the start and they were able to work things out. Whether they legally worked things out, I don't know, but I was able to close
It's not a gray area at all -- the refinance contract that you sign will have that info. I think MOST say you have to live in the house for a year after the refinance, but some may be different.
As to whether you'll get caught, that's something else. But why would you think it's a gray area legally if it's right there in your contract? The bank(s) you're applying to would give you that info (if you're not afraid to ask for it! ).
This is my understanding. Plus, you will need to figure out the penalties if you are caught, and decide if it is worth it.
I believe you can refinance as an investment property, for a slightly higher rate, which is a tax write off. I find it's easier just to do stuff legally. Or live in your property for a year, and then you are off the hook.
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So quite often the mortgage will get sold to a national company, e.g. Wells Fargo, months after closure. This happened to me and I didn't sign anything with the new company so wondering if the restrictions carry over from the original mortgage company or not.
Your servicing rights got sold, not the mortgage. The terms of your mortgage have not changed.
I should have specified, this is a multi-family home that I own and live in. Are you telling me I need to change the type of homeowners insurance I have if I move, even if I already have tenants currently?
Sorry, just saw this. By not telling your insurance agent a tenant is in the property, you are only setting yousrlf up for an insurance claim denial. What if your tenant starts a fire? She's not a house guest. Don't take Penny foolish shortcuts.
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) And again, as others have pointed out, you would have to get LANDLORDS' insurance as soon as you make it a rental, and the insurance company would notify the lender. Otherwise, if you had a claim, it would NOT BE COVERED because your homeowners' insurance would not protect a RENTAL PROPERTY. I would like to think people would not take a chance on a valuable piece of property by NOT insuring it!! 
).
