If I buy a residential home as a primary, but because I'm overseas at the moment, can I rent it out?

Asked by KCCHILDS, Mount Pleasant, SC Mon Dec 16, 2013

I know it says I have to occupy the home within 60 days. I don't want it to sit empty, and I don't want to have to pay 20% down. Right now is the only time I can get a loan on two properties. Plus we don't want to wait until I get home, sell our house, move to a rental, find another home, move again! I'd rather buy now, rent it out until the specified date I'll be home, then move right out of mine and into the newer purchased home. Then maybe rent or sell my current. Any and all comments are appreciated. Thanks.

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Nina Holland…, Agent, Charlotte, NC
Wed Dec 18, 2013
You can rent it out, but you would need to double-check with your lender as to how the property is categorized--if it's not used as a primary residence it becomes an investment property. You might want to shop around for lenders who might take less of a down payment than 20% on an investment property.
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KCCHILDS, Home Buyer, Mount Pleasant, SC
Tue Dec 17, 2013
I'm not trying to commit mortgage fraud. That's why I posed the question. I've asked lenders, and they either say they don't do investment properties, or give me the go ahead, and just tell me to hold it for a year if I want to rent it. No one actually answers the question, which y'all have for the most part. I just wanted to rent it out until I got home. My wife and son are pretty adamant about not moving until I get home. I'll just build my savings until right before I head home, and purchase then, as Mr. Dicecco has suggested. Thanks for everyones time and comments.
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Laura L. Mil…, Agent, Charlotte, NC
Tue Dec 17, 2013
Dear KC:
One cannot rent any home of any kind and still call it a primary. However, you may be able to purchase one as an investment property. You would have to occupy within 60 days to call it a primary. Otherwise, it would be an investment property. Hope that helps! Let me know when you are ready to buy either for investment or your primary home.
Laura L. Miller
RE/MAX Executive Realty
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Daniel Fisher, Agent, Charlotte, NC
Tue Dec 17, 2013
Good afternoon, KC:
Best solution seems to buy a home as an owner occupant and have your wife and child actually move in as their personal residence, then, to compensate for the lost support from family, suggest they join a few local organizations and/or social groups and volunteer with something they care about. If that is not possible, you may be able to purchase a second home as a rental with less than 20% down. Later, when you move in as your personal residence, you might be able to do a cash out refinance and achieve a lower rate. If you appreciate an answer, please give thumbs up. For the most helpful answer, please say thanks with a best answer click.
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dave, Agent, Charlotte, NC
Tue Dec 17, 2013
It seems what you are trying to do is a noble move. However; the lenders are getting tough on this and you have only one options. One would be to buy it as a second home with the intentions of moving there as your primary residence in X amount of months after you get home form overseas.

If you try to purchase a home with the intention of making it your primary home while you are overseas and tell the mortgage company that your wife and child will be moving into it within the specified time frame and do not and have never had the intention of doing it you are committing loan fraud. The ramifications of that are far greater than if you had to wait to buy or letting the house sit empty until the end of your deployment.

You have to intend to move into the home within the specified time frame as your primary residence to consider it that. There are very few exceptions to this rule and none apply to after you close. You could have bought the house to move into it and a few weeks later find out you are getting transferred to another part of the country or overseas...Then it is not considered mortgage fraud for example because you intended to live there and a unforeseen job change is forcing you to move.

But I recommend you either wait to you are coming home or leave it vacant. You are so close to coming back now why not wait? If you are six months out an average loan is going to take you 30 to 45 days to complete anyway....Then if you factor in looking for a house and negotiating you are looking two to three months at minimum before you can close. If you start your process with four to five months left you would only at worst maybe have one or two months empty before you get home.

Dave diCecco
Helen Adams Realty
Cell: 704-519-7895
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Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Tue Dec 17, 2013
All of the Covenants in the mortgage are important, including the one regarding possession. You can’t use it as a primary residence or a second home and rent it out. Misrepresenting anything in order to get a mortgage is fraud. Here is what I tell people that ask me how to “work around” (code words for commit fraud) the guidelines: The same government that audits lenders is the same one that audits you! What is the source of money for a mortgage today? Fannie, Freddie, FHA? Are they a part of Mexico?

I am surprised that anyone would put the proof in writing of the crime they committed and attest to what they did. Is this serious? The average bank robber only gets about $7,000, how much are you talking about borrowing?

Larry mentioned that he isn’t aware of any lenders watching, they do. Ever see anyone taking pictures of your home? Ever seen a credit inquiry on your credit report and not know why it is there?
Anyway, most of this is speculation; any lender is going to question how you intend to work overseas and live here, not possible. If the lender follows the guidelines they protect the borrower from themselves. They make it difficult to commit mortgage fraud. Finally, check the length of the statute of limitations in the state the property is located, the amount of fine that is possible and the number of years in prison. Not possible? I read an article about a non-default fraud over $100 cash sourcing issue that the guy ended up in prison.

Call it what it is, a rental property until you move back.

Finally, the statement, "Right now is the only time I can get a loan on two properties." sounds a little more serious than at first glance. Sup with that? Good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Web Reference:  http://jamessimms.com/
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I would be straight up with the lender, buy it as a non owner-occupied property, the interest rate will be a tiny bit higher but my guess is a lot lower than the owner-occupied rate will be next years. Good luck,
Flag Wed Dec 18, 2013
Right now, I am a contractor overseas, and making a lot of money. So my debt to income ratio is greater. Once I get home, and Charleston jobs don't pay squat, I will not be approved to buy another home, without selling my current one first. Also, being December, it's a slower sales month, and sellers and banks are willing to negotiate more, or so we're told! Thanks for the reply.
Flag Tue Dec 17, 2013
My NC Homes…, Agent, Chapel Hill, NC
Tue Dec 17, 2013
As you seem to be aware there is a requirement when receiving a primary mortgage that you occupy it within 60 days. Failing to do so is in fact committing mortgage fraud.. That said I'm not aware of any mortgage police checking on homes, but honestly no one should be encouraging you to risk the chance and I don't think posting questions like this on a public forum is in your best interest. Perhaps more discreet, direct talks with a lender would be a better way to go.
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Natalie Bing…, Agent, Charlotte, NC
Mon Dec 16, 2013
You can buy the home as a second home or investment property. (If you are purchasing the property as your PRIMARY residence you must reside there). You will need to speak with a Lender/or Mortgage Professional to determine if there are other options.
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KCCHILDS, Home Buyer, Mount Pleasant, SC
Mon Dec 16, 2013
My wife has family there, but no one who could occupy it while I'm gone. My wife and son don't want to move until I'm home either. Right now, she is surrounded by close family and friends, which helps out since I'm not there. Otherwise they could move, and rent the existing home.

I didn't want to buy as investment, since they require 20% down.

I will be home around 6 month time frame, but just didn't want it to sit empty until then.

Thanks for your replies!
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Vivian Olkin, Agent, Carrboro, NC
Mon Dec 16, 2013
Talk to a lender about a 2nd home, see what criteria they have for this. Do you have other family who can live in it until you come back here?

Good luck,

Vivian Olkin, aka Crazy Viv
Web Reference:  http://crazyvivhomes.com
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Melody Miller, Agent, Buford, GA
Mon Dec 16, 2013
You can purchase it as an investment property but not as primary residence if you aren't going to live in it.
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tim melton, Agent, Charlotte, NC
Mon Dec 16, 2013
You will have to occupy it as your primary residence within six months or whatever the lender requires.... otherwise you will be committing loan fraud.
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