Owner Occupied Mortgage - Renting?

**BurnHard** · 10-22-2017, 04:13 PM

So, I have been under contract on a new townhouse build for 6+ months. I'm within 3 weeks of closing, locked rates with a local credit union, and work situation is changing just enough that I'm considering not living in the unit myself but renting closer to my office. On a somewhat separate topic, I had discussed option to invest again in local RE market in 9-12 months with loan officer; he seemed chill, suggesting they'd finance me for another owner-occupied loan as soon as 9-12 months if I showed intent to live and actually lived in my current place for a while. To make it short, how ambiguous is this owner-occupied deal when it comes to mortgages? Do I need to tell my bank if I "move out" and rent my place out within a month of closing? Are they going to be butthurt? Seems to be more of a greyzone than some black & white law...

Advice?

PS: I'm keeping the unit, no way I'm backing out of the deal, if I have to I can certainly live in it for 12 months...

**Foggy_Goggles** · 10-22-2017, 04:52 PM

My experience is that the lender really doesn't care. Insurance is a different matter. I wouldn't want a renter burning the place down in the underwriter believes you live there.

**GeezerSteve** · 10-22-2017, 05:17 PM

The lender cares because there are different loan underwriting standards for owner-occupied properties vs. investment properties.

Burn, your loan documents likely contain representations and warranties (from you) that you plan to occupy the premises upon closing. It might also provide that you warrant the accuracy of the reps and warranties up to closing, and it also might create an affirmative obligation for you to update any changes that would render a rep or warranty to be untrue as of closing.

If you make timely payments, the condo lender (or, if the paper is sold, whomever is holding the paper) won't care. But the fact that you borrowed re condo #1 as an owner-occupant might have a ripple effect if you seek owner-occupant financing for property #2 soon after closing #1.

ETA: A copy of your posts on this thread would be admissible evidence in the rare event the shit were to hit the fan.

**AK47bp** · 10-22-2017, 06:32 PM

Go reverse. Mortgage that is.

Only way to go

**liv2ski** · 10-22-2017, 08:15 PM

As Steve said, the lender definitely cares. It is called occupancy fraud. That said, read the NOTE on your loan. It will state how long you need to owner occupy the property, typically 6-12 months. Just do it and then move on or if you are putting enough cash down to qualify for a N/O/O loan now, take the higher rate and just do the right thing.

**smitchell333** · 10-22-2017, 08:50 PM

https://nytimes.com/2015/06/07/reale...o-lenders.html

Not clear in your job situation and what not but I think you should decide if you want the place (and what if any out in the contract you have).

If you do want to own it then just go ahead and buy it and and sign the owner occupancy affidavit (sample here http://www.bancmac.com/Rates/occupancy.pdf) but definitely move into the place after closing and postpone the decision til later about possible move to other locations. If then a few months later you decide that it’s better for you to rent elsewhere then you shouldnt have an issue as at the time of closing you planned to occupy it.

You could just do a loan with it as a rental but will probably need a bigger down payment and pay a higher interest rate.

**BurnHard** · 10-23-2017, 09:44 AM

Thank you all!

I was 100% planning on moving in when I first got rates locked. I'll move in on closing and live in it for 6+ months, no big deal. I'm being a spoiled little bitch and would prefer moving to within 5-minute walk of my new office, but a 10-minute drive commute will do just fine for now.