Tracey, Home Buyer in Suffolk, VA

We refinanced our residence last month and now my handicapped mother needs to move in but we dont have a ground floor bedroom.

Asked by Tracey, Suffolk, VA Fri Jun 15, 2012

There is a one year owner occupancy rule before you can use home as rental property. What exceptions are there to this rule? I have heard that job or family changes may be considered.

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Beth Grant, , Virginia
Fri Jun 15, 2012
I would suggest talking with your Lender and explaining the situation to them first. The one year owner occupancy rule was put into place in order to keep applicants from lying about their intent, since there are different rules for non-owner-occupied properties being refinanced AND the rate/points are higher due to risk. It is a question of intent. When you refinanced, I'm assuming your intent was to refinance to get a lower rate and payment. If you took cash out, that is a different situation.
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Lori Jeltema, Agent, Newport News, VA
Sat Jun 23, 2012
If you are going to be moving out and selling the property I don't see a problem but if you are going to be moving to a new home and renting the property, I would suggest talking to your lender.

How will they find out?? Well, as soon as you have a renter in there and change your insurance policy or a renter places renters insurance on that property, guess who is notified?

I had a client buy a home for him and his child, meet a girl with children and they decided to get married and buy a larger home - all within about a 6 month period. He rented his smaller townhome and the lender who held his mortgage at the time called his loan and he had to refinance to a non owner occupant loan.

At the time of the original purchase, it was just him and his son and no new love in site. We were all very surprised with the lender since his intent was good. You don't know what will happen but if you do not intend on selling and will rent, i would be prepared for the possibility of the lender questioning it. The lender is the one with the rule on the property.
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Vicky Chrisn…, Agent, Purcellvile, VA
Fri Jun 15, 2012
Who has placed this rule on the property? Your lender? I don't know how they could enforce this, or even how they would discover this unless you defaulted on the loan.

Unlike other posters, I would not suggest that you talk with your lender - if there is a way for them to enforce it, you're the one raising the issue. They may tell you that you have to give them their money back! (I don't really think that they will, but who knows?) Instead, you may wish to seek legal advice if you're concerned.

HOWEVER, I will tell you that *generally* speaking, statements to that effect have to do with intentions...just as another prior poster indicated. Having a mom who had a stroke several years ago (and then she needed to move in with me) I know that things that you didn't expect do happen... and there's simply nothing you can do. I can't imagine that a lender wouldn't acknowledge that, and would be able to force you to continue to live in the home if your family obligations made that impractical.
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In order to get buy investment property you have to pay higher interest rate and have a 25% downpayment (you can only finance a max of 75% of appraised value OR purchase price whichever is LESS)
Flag Fri Jun 15, 2012
We were told its a rule for FHA and Conventional Loans and that it's a government rule. The home must be owner occupied for 12 months after closing. I believe it is to stop people from buying homes for rental property and getting the best rates.
Flag Fri Jun 15, 2012
John R Beave…, Agent, Portsmouth, VA
Fri Jun 15, 2012
First of I would suggest you contact the lender who did the refi for you. They have all the documents and know the loan package that they put you into. If after speaking with them you decide to sell your present home and purchase another I would appreciate the opportunity to talk with you about my qualification, marketing plan and pricing options.

If you wish to contact me, click on my profile picture and it will bring up my contact info. Either call me or email me and I will get right back with you.

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Jon May, Agent, Newport News, VA
Fri Jun 15, 2012
Several options. You can rent your home and go buy something that better fits your needs. You can sell your home and buy something that better fits your needs. You can add on to your home to accommodate your mother. The decision is really up to what do you want to do and the financing. Does your mother have a home that needs to be sold? Maybe sell her place and use the money to add on? Are you happy with where you are at? Are schools a consideration? Please provide more details for more ideas.
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