Author Topic: Question regarding owner occupancy clause of mortgage refi  (Read 550 times)

ysette9

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Question regarding owner occupancy clause of mortgage refi
« on: February 25, 2020, 08:16:50 PM »
We refinanced our mortgage late last year. We are now looking to relocate in the middle of this year and rent out our place while renting ourselves in the new location. My husband was going through old paperwork and found the Occupancy Certification where we signed that we would reside in our house for 12 months after the refi "unless extenuating circumstances exist which are beyond my control or you otherwise consent in writing. I agree to notify you of any extenuating circumstances, and your consent will not be unreasonably withheld."

What do you think of this clause? Is it enforceable? More importantly, is there any chance of the bank or whomever they resell to finding out if we move 7 months after refinancing? My sense is that this is probably not a big deal, but I wanted the collective wisdom of you all. Thanks.

cchrissyy

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Re: Question regarding owner occupancy clause of mortgage refi
« Reply #1 on: February 25, 2020, 08:21:44 PM »
Did you promise to reside there or did you promise that you intend to reside there?

I thought this worked the 2nd way and therefore as long as you were honest at the time there was nothing to worry about when plans changed.

FatFI2025

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Re: Question regarding owner occupancy clause of mortgage refi
« Reply #2 on: February 25, 2020, 10:28:35 PM »
The common wisdom is that the bank will only care if you stop paying on the note. I refi'd and moved a few months later, but had a valid reason. No problem five years later but YMMV.

Telecaster

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Re: Question regarding owner occupancy clause of mortgage refi
« Reply #3 on: February 25, 2020, 10:59:33 PM »
Did you promise to reside there or did you promise that you intend to reside there?


This. The language almost always says you intend to reside there.  If you intended to do that when you signed the docs, then fair enough. 

Monerexia

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Re: Question regarding owner occupancy clause of mortgage refi
« Reply #4 on: February 25, 2020, 11:06:31 PM »
We refinanced our mortgage late last year. We are now looking to relocate in the middle of this year and rent out our place while renting ourselves in the new location. My husband was going through old paperwork and found the Occupancy Certification where we signed that we would reside in our house for 12 months after the refi "unless extenuating circumstances exist which are beyond my control or you otherwise consent in writing. I agree to notify you of any extenuating circumstances, and your consent will not be unreasonably withheld."

What do you think of this clause? Is it enforceable? More importantly, is there any chance of the bank or whomever they resell to finding out if we move 7 months after refinancing? My sense is that this is probably not a big deal, but I wanted the collective wisdom of you all. Thanks.

I was buying an investment property and looking to get the second home interest rate and my banker told me "just don't tell me you're renting it." Now if something happens with the tenants in there you may run into insurance issues so be careful. At worst you may need to refi again as an investment property, some lenders require 25% down, higher interest rate, etc., etc.

YttriumNitrate

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Re: Question regarding owner occupancy clause of mortgage refi
« Reply #5 on: February 26, 2020, 06:32:29 AM »
What do you think of this clause? Is it enforceable? More importantly, is there any chance of the bank or whomever they resell to finding out if we move 7 months after refinancing? My sense is that this is probably not a big deal, but I wanted the collective wisdom of you all. Thanks.

My mortgage company knew I was changing my primary residence to a rental before I even moved out. They started calling to get my business for the loan on my new place. The mortgage company pays your insurance through an escrow account, and as soon as you start the process to switch the insurance to something appropriate for a rental, your mortgage company will know.

affordablehousing

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Re: Question regarding owner occupancy clause of mortgage refi
« Reply #6 on: February 26, 2020, 11:08:56 AM »
the mortgage company sold your loan long ago and doesn't care what you do. Every investment property starts as "intending to be owner occupied" unless the buyer doesn't realize you get a better rate as owner occupied.