If I have a home, written up as a owner occupied, but use it as
a rental for the first year I believe the bank could use that as a reason to have the mortgage paid in full. The question is how do you get around that?
The loan is in my wifes name, I was thinking in a few months getting a loan in my name to, in effect purchase it from her.
The bank could come and ask for the loan to be paid in full. Beyond that, if you purchased a home as Owner Occupied and are not using it as such, the Builder (if this is a new home) could take the home back and pay as little of 95% of your purchase price.
I assume you are in Arizona based on your name. I sell a lot of homes here and the new home builders are getting very particular, even to the point of not allowing you to own more than one home. I am not sure how that would hold up if someone took issue with it however.
If you home is a resell, it has been common practice for the Lender to verify occupancy once possibly twice during the first year.
Well it is a resale. Its a 80/20 loan, with the 1st ($128K)having a prepayment penalty. I was thinking of refinancing anyway and having the penalty added on to the new mortgage.
I do know the mortgage company will sell the loan off to someone else.
Doing a refi may be good, but if you do a non-owner occupied loan (NOO) your interest rate will be marginally higher. It will however allow you to do what you wish. Is the prepay a reasonable amount of money?
Typically a prepayment penalty is incorporated into a loan in order to reduce your interest rate, I have represented many clients lately who had these, they are awful and do not allow you to shop the rates as actively as you may wish.