Major home refinancing question and fraud concern--please help

[Harriet Vane]

We are set to refinance our home but are concerned about one key point. We are planning to rent our home to a friend at some point this semester, possibly as early as March or as late as June. Earlier is our fervent desire, but it's based on when we find a home to move into.

 

There is a question on the forms that asks if we intend to live in the home we are refinancing. The bank loan officer said that means--are we living there when we sign the papers. The bank guy said to mark YES, we intend to live there.

 

Here's the exact wording: "Do you intend to occupy the property as your primary residence?"

 

That doesn't seem right--we know that within 2-4 months of this refinancing we will definitely be moving and renting out this house. Doesn't that change things?

 

We are scared to sign the papers. Please help.

[elegantlion]

I don't know about the legality of it, but I would have an ethical problem completing the refinance. Are you going to be moving permanently? Is this a temporary rental? That would color my perspective.

 

From an insurance standpoint once you rent out the property you technically need a landlords policy on the property, not a homeowners policy. Doing so would mostly likely create a red flag at your mortgage company.

 

I would contact an attorney to see what issues you might encounter down the road.

[TravelingChris]

We did this. I talked to the mortgage company and they didn't have a problem. I didn't say we thought we were moving but asked what if we were going to move a few months from now. We did not have orders at that time but were waiting for them. They said they knew we were military and could move at any time. We also knew we had enough income to pay the rent any months the house wasn't rented so we knew we wouldn't be going into default.

[cjzimmer1]

I'm pretty much a follow the rules kind of person. But I wouldn't have a problem signing. The papers don't say how long do you intend for this to be your primary residence do they? No, so when you sign the papers it will be your primary residence. And while you PLAN to move in 2-4 months you have no idea for certain that will happen. What if your hubby suddenly got laid off from the new job? I doubt you would be looking to move at that point. What if there was a huge medical emergency or some other situation that suddenly took all your time and energy? Again you wouldn't be moving because you just wouldn't be able to handle it. So I think you are safe to sign the papers. Right now it's your primary residence and will be when the closing happens.

[Just Another Jen]

We had a similar situation and our bank rep said as long as we live in the home during the month of financing that is what they need to know. If you were already renting it out then that would be fraud.

[katemary63]

I would sign. The lenght of time is not mentioned. If you spoke to the mortgage company and they are okay with it, how could it be fraud?

[Tammyla]

Don't sign until you have read and understand all the fine details.

 

My sister had to sign something when she purchased her home and now is unable to rent it out with her current mortgage. I don't know the details, but she is not happy, and they've lived in their home for 5 years.

[Harriet Vane]

I would sign. The lenght of time is not mentioned. If you spoke to the mortgage company and they are okay with it, how could it be fraud?

 

I'm spooked by stories like Joanne's wherein what the bank says one day is contradicted the next.

[Harriet Vane]

Thanks for your thoughts, everyone. I guess we'll read the fine print, and while we're at it check with our insurance company about how things change when we're renting.