Lender is forcing move in primary home - sharing experience

Many here thinking to buy as primary and turn into rentals.

What lender can do? They are forcing us to move in as a part of notarized closing document. Sharing my Experience - Do not ask me the lender or any further details.

We are actually planning to move in as it reduces commute time to 10-15 mins instead of 50 mins, but little after remodel or renovation. Since they force us, we immediately move and think about remodel or tear down later.


:scream: Horrible lender.

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I thought all lenders do that when you buy a new home. That’s what allows you to get primary rates vs. investment rates. I don’t get why it’s a surprise they want you to move into a house if you get a rate based on primary residency. I thought you were going to completely or mostly tear down the existing house to increase the size?


I thought this was the case too. however, they mostly overlook and don’t care much about this. as long as you don’t rent right away you owuld be fine (For renovation). not sure about rentals.

Also, for most tear down properties, this is basically impossible as most peopel don’t stay in the home at all, and start the process with the city.

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Does tearing parts out mean you’ve moved in? How can you renovate if you are expected to be living there?

What’s the definition of occupying the property as primary residence?

Means you don’t cheat by renting it out for monetary benefit.

but also a lot of people rent it for tear downs since it takes time.

If you tear down to rebuild, can the lender call the mortgage due? Tear down is a huge risk to the lender. If you can’t rebuild for some reason and get foreclosed, lender would incur a big loss.

Renting out is not a big risk as far as I can tell. Lenders are focusing on something insignificant economically, it’s just a moral issue with very little economic impact.

For rebuilding, if you are taking a loan, it’s construction loan and it “assumes” your mortgage - it’s basically refinance with a different lender, interest only, and higher rate.

You can rebuild with your own fund. Construction loan is expensive. Most of the money is in the land, Construciton cost is a small portion.


primary rates ==> 4.25%
investment rates.==> 6%

Yes, Plan is to completely tear down and build.

Confused about property tax impact when we do.

Assume home is around 1.35M, build cost is 1M for 3000 sqft home. But city (accounts) min rate is $110/sqft = 330,000 as building cost.

If I sell it right away, it may be around 2.5M or more. The nearest sold was

I do not know whether city applies property tax at 2.5M or 1.68M (1.35+.33)? I do not know how city re-appraise after tear down/rebuild as they would like to maximize city revenue/property tax.

Just stuck here.

Confused about property tax impact when we do → you ask for reassesment, lower the value.

“How can you renovate if you are expected to be living there?”
I can write a book about this and it would read like a horror story.


I have two options

  1. Sell fully paid off rentals, but need to pay LT.Cap.Gain and sells commission+expense
  2. Cash out refi fully paid rentals (which is already on hold due to primary purchase, I need to re initiate) but that is 6% mortgage.

I will not get construction loan as I am not experienced builders (tried previously) and construction loan comes with upfront points which is killer.

I thought you wanted to live there for a few years. But now you want to renovate and flip? Or are you just exploring this theoretically from a tax angle?

Simple min renovation is add a bath room. This is what immediate need. I need to add one more bath here.

Let me know what are issues we will face?

No flip for sure. Eventually we wanted to build a home and live there instead of living at 1950s old home. Build a home needs big funding that can be raise using my rentals (either refi or sell). we do not want to sell, but trying to cash refi + my current cash.

If this is going to be a temporary addition, I am sure you can keep it to about ~70 sq ft. Looks like you will need to

  • 4 concrete posts/base, then subfloor on top of it.
  • frame the area,
  • plumbing
  • electricals for the fan/switches
  • hvac extension into the bathroom - I am unsure how you can get by without doing this as the city might not let you.
  • Sewer cleanout installs - again city will mostly impose this.
  • Minor insulation in the attic
  • Plumbing vents through the roof

You will have at least 3 inspections - one for the rough in+framing+ pipes, one for the water test and one final.


I believe they will just reassess to the market value and NOT the building cost. I had a friend who rebuilt and their house was reassessed to the market value. I think the county tries to milk as much as possible and if you don’t agree, you can appeal.

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