UPDATE: Renting with owner occupied mortgage.

[KLD313]

I just wanted to update with what my attorney said. He said renting under these circumstances is a technical default that will never be pursued by the bank. It would be a one in one thousand chance for them to find out, let alone do anything. His paralegal advised that I leave the insurance as is. I'm not sure about the last part but I'm still waiting on a response from her.




Does anyone know what happens when you want to rent your house but your mortgage specifies that the house has to be owner occupied? I'm upside down in the house but can get top dollar for renting it out. I havent lived in the house for a year anyway so I havent been occupying it. Idk if I should tell the lender or what. They may find out when I change my insurance to cover renting. Thoughts?

[ha98ed14]

Unless you are prepared to violate the terms of your loan, you can't rent it out. We have the same type of loan. If you decide to break the rules, I would not change your insurance.

[KLD313]

Unless you are prepared to violate the terms of your loan, you can't rent it out. We have the same type of loan. If you decide to break the rules, I would not change your insurance.

Thanks. Do you think calling the lender and asking about it would help? I can't keep paying a mortgage on this property and it seems like a hive risk to rent it and not change the insurance.

[AnnieW625]

Call the lender and see if there is any chance you can change the term of your loan so you can rent it. You might have to short sale if you can't. Good luck.

[amldaley]

It depends on how long you have been in the house and if you are relocating for work, renting vs buying again, etc.

This happens to lots of people who buy a house and then have to move. You basically have to prove that there was no fraud involved in obtaining that type of loan in the first place. If you have lived there a couple of years and you have a reason to move now, the mortgage companies would much rather have their loan paid monthly vs a short sale or foreclosure.

It may, however, come in to play when you try to buy another home as you can usually only have one such loan out at a time. In past years when the industry was more loose, you could just keep stacking these up but not the case now.

Usually the difference is the interest rate and possibly, depending on your lender, if you have more than 20% equity.

You could call a local real estate attorney for a consult or a mortgage broker. I would not call the bank as the first source to ask b/c they will do whatever they can to raise your rate.

[wellyes]

I would absolutely not risk going against the terms of the loan. It could be a financial nightmare - the risk is far greater than the monthly rent you'd get.

[KLD313]

It may, however, come in to play when you try to buy another home as you can usually only have one such loan out at a time. In past years when the industry was more loose, you could just keep stacking these up but not the case now.

Usually the difference is the interest rate and possibly, depending on your lender, if you have more than 20% equity.

You could call a local real estate attorney for a consult or a mortgage broker. I would not call the bank as the first source to ask b/c they will do whatever they can to raise your rate.

I'm already in another home and I don't have a mortgage on it. I may have 20 percent equity. The only reason I'm upside-down is because of my second mortgage on it thanks to my ex-husband but that's another story.

I do have a real estate attorney, I'll call him tomorrow. Thanks.

[rachelh]

The problem is you signed as owner occupied/primary residence. If you call them and say you want to rent it out, I cannot imagine they will just change the terms; it would have to be reunderwritten as a investment property which is not easy to qualify for these days at all, rates are higher for investments than owner occupied, etc.

I am not advocating lying at all about this but I would not change your insurance policy because your insurance company might notify the lender of the change.

You really might be better off just telling the lender the situation and be prepared that you might need to sell.

Good Luck!

[JBaxter]

It depends on how long you have been in the house and if you are relocating for work, renting vs buying again, etc.

This happens to lots of people who buy a house and then have to move. You basically have to prove that there was no fraud involved in obtaining that type of loan in the first place. If you have lived there a couple of years and you have a reason to move now, the mortgage companies would much rather have their loan paid monthly vs a short sale or foreclosure.

It may, however, come in to play when you try to buy another home as you can usually only have one such loan out at a time. In past years when the industry was more loose, you could just keep stacking these up but not the case now.

Usually the difference is the interest rate and possibly, depending on your lender, if you have more than 20% equity.

You could call a local real estate attorney for a consult or a mortgage broker. I would not call the bank as the first source to ask b/c they will do whatever they can to raise your rate.

I though there was a time frame on it also. I would give a call. In this climate they may be happy just to get the mortgage paid

[KLD313]

I though there was a time frame on it also. I would give a call. In this climate they may be happy just to get the mortgage paid

I know, you would think they would just want their money. There is no way I'll qualify for a new mortgage, my credit is destroyed, again thanks to my ex- husband.

[KLD313]

Update in OP.

[JBaxter]

Update in OP.

IF you have to make a claim and they find out its a rental. They can refuse to cover it.

[KLD313]

IF you have to make a claim and they find out its a rental. They can refuse to cover it.

That's why I don't understand why she said that and Im waiting for more info. I thought her answer was weird.