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.
Good luck
KJenn
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.
Not sure exactly what the payment would be. $128 at 7.7% for 2 years. Im guessing 2 years interest.
Typically most lenders will charge anywhere from 3-6 months interest, at $128k @7.7% that would be $2463.99 if it is a 3 month prepay or $4927.99 if six month prepay.
If the home is in the Phoenix area I am sure it has already appreciated more than that.