I have been living in this home for 10 years but we plan to move to a better school district in four months. Can I refi this current home as primary?

Asked by Ken22992, San Jose, CA Mon Oct 12, 2009

resident now and claim my future house as primary resident as well? We plan to rent it out after we make the future purchase.

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Otis Clay, Agent, San Jose, CA
Fri Oct 16, 2009
Hi Ken,
The answer is quite simple. The home you currently live in is considered your primary residence and therefore refinancing it will not be an issue. The concern will come when you attempt to purchase the new home. There will be no problem purchasing it the issue will be how to classify it. Depending on how close the home will be to the current home it could be classified as a rental property or a 2nd home. This will require you to put more money down and possibly incur a slightly higher rate. However, there are lenders that would allow you to purchase it as your primary residence if it is considered an upgrade and you can provide proof that the current home would be occupied by a renter. As stated in a previous answer the bank will only count 75% of the rental income towards your personal income. Also it would be a good idea to submit a letter of explanation to the lender regarding the reason for the move. I hope my information helped a bit. If you'd like to discuss this further feel free to contact me at your convenience.
Otis Clay
NoJa Mortgage Corp.
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Jessica Dodge, , Campbell, CA
Fri Oct 16, 2009
I agree, it's always best to enlist the advice of a professional. A real estate attorney or a CPA (Certified Tax Adviser) are typically the strategic partners I would refer a client to for this type of question. The landscape in real estate is always shifting. Inquiring direclty to the specific source for an accurate answer is always the best policy.

Side note...I have a Buyer client who wants to purchase in the Evergreen High School draw and has some very specific search criteria. Please let me know when you are ready to list your house. I'd like to take a look at it before it goes on the market.

Good luck!
Web Reference:  http://www.thedodgeteam.com
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Terri Vellios, Agent, Campbell, CA
Thu Oct 15, 2009
The typical rule is you must live in your home 2 of 5 years to qualify as primary resident.

With that said, every person's situation is unique, and so I advise you to seek personal advice from your mortgage professional and tax adviser.
Web Reference:  http://www.terrivellios.com
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Bill Mccord, Agent, San Jose, CA
Mon Oct 12, 2009
The simple answer is yes you can.
Be aware that when qualifying for the loan on your new house the Lender will only allow 75% of the rent as qualifying income for you.
I suggest talk to a mortgage professional about this strategy as there are several different ways to excecute your plan and you should be aware of all factors before starting the 1st step. Remember, what you don't know can cost you money.
Good luck,
0 votes
April Tavares, , Saratoga, CA
Mon Oct 12, 2009
Hi Ken 22992,

The advice below is right on. Because you clearly have a plan established, your next step should be to talk with a Mortgage Professional. The mortgage meltdown and the effects it put on our economy has caused lenders to drastically change how they do business and they continue to change as our law makers require new guidelines. Speak with someone you have used in the past for your borrowing needs, check in with family and friends to see if they have a contact that they were happy with, or I would be happy to provide you with a couple of names that you could call to ask about your specific situation.

If you haven't already, I would also suggest that you start watching the home sales in the area in which you hope to purchase your next home. Becoming educated will help you make a better choice, for you and your family. Think about partnerning with a Realtor that can will provide you with monthly sales reports in your target area.

I would also suggest (if you haven't already) that you check websites like http://www.Craigslist.com or http://www.Rentometer.com to see what you might expect to receive for rent on your current home.

April Tavares, GRI, ASP
Realtor, DRE License #01742179
Web Reference:  http://www.AprilTavares.com
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Janet Guilba…, , Alamo, CA
Mon Oct 12, 2009
Ken: Yes, you can refinance your house as your primary residence because the house is your primary residence.

Heads up: there are now guidelines that impact your ability to buy a house to live in when you are leaving a house and renting it. Unless you will be RENTING when you move, please consult with a mortgage professional about buying a property in the new school district.

Feel free to call me if you need help
0 votes
Robert Green…, Agent, Cherry Hill, NJ
Mon Oct 12, 2009
Most lenders will require you to live in a home for a particular period of time if it is to be considered your primary residence. This strategy will give you better rates and terms. Start shopping for a lender and be up-front about your plan.

Robert Greenblatt
Keller Williams
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