Primary Residence For Mortgage
Hi,
About two months back me and my wife saw a house VERY close to her work and decided to make an offer on that. We closed on this house last week. Originally we were planning on moving into this propert. Our mortgage includes a condition that we will move into this house within 60 days of closing. But, after closing we have decided not to move there as that property needs some work. We will insted rent that place for a 100$ positive cash flow.
Question: are we going to get into trouble for not moving into this house? SHould we contact the mortgage company on this topic? We are planning to rent it out for six months which will give us enough time to gather some funds for fixing the place before we move in. Please share your expert advice. <IMG SRC="images/forum/smilies/icon_confused.gif">
[ Edited by kingfasi on Date 09/07/2003 ]
[ Edited by kingfasi on Date 09/08/2003 ][ Edited by kingfasi on Date 09/08/2003 ]
If its FHA occupancy is a requirement but I dunno if they are going to enforce it (how would they know). Ditto for conventional. I see this as different from someone who never had the intention of occupaying it. In this case you did but changed yoru mind.
Curious: If it's not suitable for you to move in, how is it that you will be able to rent it?
And for only 6 months. Most renters are looking for long term, at least 12mo. Even if you rent out month to month, 6mo from now when you tell your renters to leave they might not be to happy and leave the place worse off than when they moved in. If you tell potential renters upfront that it will only be for 6mo, you might not get alot of takers. [ Edited by jmBROKEr on Date 09/09/2003 ]
Thanks for the responses. Here are some answers to the great points that were brought up...
1) It is a Conventional Fixed 30 year mortgage and I got a great rate.
2) It is not suitable for us to move for a couple of small reasons like there is only 1.5 bath and even those are not very nice. WE will like to make the place modern before we move in. This house is located very close to some college campuses, which means that students will be willing to rent it.
3) You are correct that most people would want to rent that place for a longer term... fortunately I have found someone who is ok with 6-month lease.
Mortgage Company is maintaining an escrow for the insurance (which I will have to change from Owner occupied to a rental property). Those documents will go to the mortgage company, which will be the first hint for them that this house is not owner occupied.
I rarely have had to deal with the insurance issue in the past due to my end of RE. However on my last house all that was required was a fire policy and it didn't need to be owner occupied.
[addsig]
Your question has generated some opinions but no solid advice...so here's the advice I'd give a client:
Send a letter to the mortgage co holding your note telling them exactly what you've said here.
Send it USPO, certified with receipt, so there is proof positive you sent it, and it's also clear evidence that you honestly changed your mind after the deal was done. And show hat it's certainly not your intent to deceive anytone and it never was, and far from trying to hide your actions, you're broadcasting them to anybody interested.
Tell then in that letter that unless you hear from them in the next two weeks that your NOT moving in, and renting it instead, is prohibited by them, that you will then be advertising for a tenant/renter, and proceed to rent it.
If you're not comfortable preparing and writing the letter yourself, pay a lawyer to do it for you.
Also might be a good idea, if it's FHA or HUD, to send copy, certified, to such agency. The lawyer should be able to tell how to do so, by examining the Deed of Trust and note docs. FHA, for example to that Agency's Secretary, at D.C. address named in the D/T or note.
It's just amazing what people get by with, who do things like this totally openly, in effect challenging anybody, anywhere, to say anything...and how rarely any adverse action is generated.
I remember a situation where a homeowner wanted to top a high poplar tree on his property line, but he was concerned that it might cause a war with his neighbor if he did so.
So he sent such a letter, giving that neighbor 30 days, after receipt of that letter, to respond or else complain, and if he heard nothing he'd take it as consent or implied acquiescence...and move ahead and call the tree trimmers to proceed.
Hearing nothing, he did, with a lot more comfort, and the neighbor never complained about it.