Owner Occupied to Rental

[Anonymous]

If a person owns a home, refinances it, and then continues to live there for somewhere between 1 - 9 months, does the person have any obligation to disclose at the time of the refi that they have intentions to rent the property at some point?

I  understand that if it becomes a rental property, it has to be reported to the local tax man and to the insurance company.

Thanks.

[Anonymous]

 You wrote:

If a person owns a home, refinances it, and then continues to live there for somewhere between 1 - 9 months, does the person have any obligation to disclose at the time of the refi that they have intentions to rent the property at some point?

I  understand that if it becomes a rental property, it has to be reported to the local tax man and to the insurance company.

I own a owner occupied rental property.

  If your house IS NOT a rental at time of refi I do not believe you have to disclose, because it is not a rental at time of refi. I live in Baltimore and your area might be different.

   And you have to check your local ordanance for the tax issue, but you should tell your insurance guy you have a properly zoned rental. It will raise your rates but not much and it will cover you if something happens to the rental.

[Anonymous]

Thanks zman!

BTW, if you want to quote a prior post when you reply, hit the white bubble with quotes in it in the format bar above, just to the left of the smiley.

[ShanetheMortgageMan]

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masdeocho wrote:

If a person owns a home, refinances it, and then continues to live there for somewhere between 1 - 9 months, does the person have any obligation to disclose at the time of the refi that they have intentions to rent the property at some point?

I  understand that if it becomes a rental property, it has to be reported to the local tax man and to the insurance company.

Thanks.

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Most owner occupied homes have an occupancy affidavit that says you plan to occupy the home for the next 12 months.  If you have plans to move out before 12 months is up then you can't do it as owner occupied.  If you planned to live there for 12 months, and then unexpectantly had to move out for whatever reason (job, health, etc.) then that is OK too... just as long as you didn't plan on it when you were refinancing.

[Anonymous]

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ShanetheMortgageMan wrote:

Most owner occupied homes have an occupancy affidavit that says you plan to occupy the home for the next 12 months.  If you have plans to move out before 12 months is up then you can't do it as owner occupied.  If you planned to live there for 12 months, and then unexpectantly had to move out for whatever reason (job, health, etc.) then that is OK too... just as long as you didn't plan on it when you were refinancing.

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Shane - Thanks for your response.  If I refi it as a rental property, what are the differences for the mortgage and refi process?  I'm assuming the APR would be higher.  What else?

Also, please look into your crystal ball and let me know exactly when interest rates will be lowest.  JK!

[ShanetheMortgageMan]

I wish I was Carnac the Magnificent and could tell you

Yes the interest rate is higher on rental properties, about .375% to .750% difference depending on the LTV.  Not much different in the refinance process except there is no recission period on the refinance, and the appraisal that is required needs a rental survey & an operating income statement (so about $100-150 more than just an appraisal).

[Anonymous]

TYVM Shane!

[ShanetheMortgageMan]

Welcome!

[Anonymous]

OK, sorry to beat a dead horse ...

If a person (no one we know, of course) has owned for 6+ years, last refi was 2.5 yrs. ago, and doesn't refi again, if that person rents the property does he/she have to disclose it to the mortgage company?

Again, I am aware that he/she has to notify the local property taxing authority and the insurance company.  TIA.

[ShanetheMortgageMan]

Nope, no need to disclose it to the mortgage company after you've lived in the home for the first year... however your insurance company might want to know.