Is that alright to do this? Has anyone done it so quick from the first Mo of the transaction?
Let’s say I do this, how soon can I turn around and say yeah yeah the old one will be my rental and buy a new primary?
That’s not exactly legal and a violation of mortgage terms.
Marcus335 is right, you are violating the deed of trust and Mortgage Note. Normally, you will not get primary finance or primary refinance until two fiscal (tax) years.
If you apply for new home purchase, lender most likely ask you to put down 25% to 35% down payment and even if you make that home as primary, they consider you application as rental.
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OK what if a genuine circumstance arises? Is 12 months the legal limit you have to stick it out?
If you move after 6 months do you have to convert the mortgage to investment prop? What if the equity is not 20-30%?? How will that work? Assuming it was 10% down purchase.
To my knowledge: Job loss or job movement (SF to NYC) or force move out are considered genuine. If you have document proof, you may be excused.
All lenders are placing a flag Primary or Investment as per Fannie Mae rule. This will be shown in every finance/refinance.
Do you have to convert the mortgage to investment prop : NO, unless you refinance.
On any case, read the promissory note, you are suppose to stay 60 days in primary home (minimum) in genuine case too.
I went through the such hassle during 2011, finally erased the issue when I moved in to the home next year 2012. My refinances were declined few times in between.
I can not forget it…
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When you apply for the loan, they will ask a bunch of questions. For instance, you work in San Jose and have a home in San Jose, and you try to buy a property in Sacramento claiming it is primary residence, they are going to question it and likely to reject your loan. And I was told that if you have live in good school district and buy a house in not so good school district, they will question it and possible reject the loan.
However, once you bought and got the mortgage, and you are discrete about renting out, then there is no way for mortgage company to find out.
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@Jil @marcus335 @jk88cal thanks!
If I don’t have to refinance and To remain discrete if the utility bills, insurance shows the same address is that enough.
Lender Pulls credit check, review tax returns directly from IRS, review your all deed of trust, promissory notes…etc.
If your refinance fails, there is no issue.
If your future purchase finance fails, your EMD is in issue. Risk is yours.
I am 100% sure they ask for letter of explanation stating change of primary to rental reason.
All you gain by stating primary is 0.25% or 0.5% interest rate and 5% (20% instead of 25% down payment) down payment.
IMO, it is not worth the hassle. You can rather state as rental and get the finance.
When I purchased in 2011, my son was last year at high school and we wanted to stay there until he completes his schooling as we bought a home 33 miles away from the then primary location. Still lenders, 3 different lenders for same reason, declined 3 times my refinance.