Author Topic: Just refinanced FHA, thinking about moving closer to work.  (Read 2630 times)

artimus

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Just refinanced FHA, thinking about moving closer to work.
« on: September 15, 2012, 04:03:42 PM »
Ok so pretty much like the title says, I just did a streamline refinance on my home last month but I'm considering moving and renting a place closer for my wife and my commutes. She currently commutes approx 30min and I commute 20min. I found a couple of places that would allow me to bike and her to drive 20min or less. My question is relating to the legality of moving out of an FHA home and renting it out while living somewhere else. Everything I've read suggests that I am supposed to occupy the home for at least one year after getting an FHA loan. And although we've lived in the home for a few years, I believe they treat refinances as new loans for these purposes. So does anyone know of any way to get around this? Should I send a letter to my new lender informing them that I hadn't planned on taking this course of action but that it is something I am considering? Should I just go ahead and do it and hope they never try to verify that I'm living there? Id rather not sell it, I believe it's a little underwater currently. What would you do? 

Another Reader

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Re: Just refinanced FHA, thinking about moving closer to work.
« Reply #1 on: September 19, 2012, 06:14:52 AM »
Lenders are not going to verify that you live in the house.  People's situations change.  What counts was your intent at the time you signed the loan papers.  That having been said, you may have difficulty obtaining another FHA loan so close to the first.  You may have to rent or else finance using a conventional loan before the year is up.

Edit:  The rules for FHA appear to be different.  Apparently FHA allows only one loan at a time, unless one of a limited set of conditions is met.  Also, the owner occupancy rider appears to be stricter than the riders I have signed for conventional loans.
« Last Edit: September 20, 2012, 06:52:15 PM by Another Reader »

artimus

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Re: Just refinanced FHA, thinking about moving closer to work.
« Reply #2 on: September 20, 2012, 03:07:06 PM »
Lenders are not going to verify that you live in the house.  People's situations change.  What counts was your intent at the time you signed the loan papers.  That having been said, you may have difficulty obtaining another FHA loan so close to the first.  You may have to rent or else finance using a conventional loan before the year is up.
Well my plan would be to rent a cheaper place than I'm in now, and to rent out the house I'm living in to actually be able to turn a profit before adding in gas/car savings

velocistar237

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Re: Just refinanced FHA, thinking about moving closer to work.
« Reply #3 on: September 20, 2012, 05:43:15 PM »
I would do some sort of due diligence before potentially violating your mortgage contract. Only a lawyer would know for sure whether original intent is all that matters, based on case law, etc. Would your current insurance cover renters? Probably not, and in getting new insurance, the insurance company is going to contact your lender.

Another Reader

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Re: Just refinanced FHA, thinking about moving closer to work.
« Reply #4 on: September 20, 2012, 06:18:18 PM »
You will change your insurance from a homeowner's policy to a landlord's policy.  You may add a property management company as an additional insured.  Your insurance company will send out a new policy that will be input into a computer by a clerk in the insurance department at the loan servicer.  As long as the coverage is at least the loan amount, the insurance department does not care.  There is no connection between the insurance department and any other department.

I have never done an FHA loan, so I have no experience with the documentation FHA requires.  In many other cases you sign a rider that says you intend to occupy the property. That satisfies Fannie, Freddie, or whoever else owns the loan.  Realistically, this happens all the time.  People lose jobs, get transferred, or move home to deal with a family illness.  They rent the property so the payments can be made.

Would I do this the week after I closed on the refi?  No, because that might cause someone looking at the paperwork during the transfer from the bank or broker to the loan purchasor to question your intent at the time you signed the intent form.  Would I do it 6 months after closing?  Yep, because I intended to live in the property at the time I refinanced, and my circumstances changed.

Get out your loan documents.  Look for the owner-occupancy form you likely signed.  Read it carefully.  Then decide if you are comfortable moving.  If you are uncomfortable, consult an attorney that is familiar with these riders.  Or just wait out the year.
« Last Edit: September 20, 2012, 06:20:24 PM by Another Reader »