Posted on: 12th Jan, 2010 09:10 am
we purchased a condo for $222,685 and put down enough money to where currently the mortgage is at $98,278.60. we have our daughter on the title as she lives there, but she recently married. she and her husband have plans to move, but want to rent out the condo space, as it has depreciated in value (it could sell today for $124,900) and it would be a loss (for us) to sell it. does it make sense to try and refinance at a lower rate.
The mortgage is $98,278 now??? What balance did it start at??? While the rate is 6.75%, we have no idea if that is the rate on a mortgage that started at $175,000 or a mortgage that started at $98,278.
If the mortgage started at $98,278, it probably does not make sense. The higher the mortgage balance started at, the more it makes sense.
If you refinance to save money and rent out the condo in less than one year and you refinance at the lowest rate which is an owner occupied rate
you have committed fraud. Owner occupied mortgages require that one live in the property for at least 12 months after the mortgage closing, otherwise it is an investor (rental) mortgage and those rates are higher and would not make sense to refinance.
If you refinance with an owner occupied rate and move out and rent before 12 months pass, you may or may not get caught. If you get caught, bad things cold happen.
If the mortgage started at $98,278, it probably does not make sense. The higher the mortgage balance started at, the more it makes sense.
If you refinance to save money and rent out the condo in less than one year and you refinance at the lowest rate which is an owner occupied rate
you have committed fraud. Owner occupied mortgages require that one live in the property for at least 12 months after the mortgage closing, otherwise it is an investor (rental) mortgage and those rates are higher and would not make sense to refinance.
If you refinance with an owner occupied rate and move out and rent before 12 months pass, you may or may not get caught. If you get caught, bad things cold happen.
Did not know that it was not allowed to rent after the refinancing to a lower rate. Just out of curiosity, why is this so?
Rental properties are considered by lenders to be "riskier" than homes that borrowers live in, always have been. Why riskier? It has been statistiaclly shown over time---many years and many mortgages---that when borrowers have a financial problem, they stop paying on a rental property a lot faster than they stop paying on a home one lives in.
Risk costs money in the form of higher rates. So, when a lender lneds on an owner occupied property, they want to make sure it is intended to be an owner occupied property, at least at the outset. They recognize that due to job changes or other circumstances they can not require someone to live there forever, so, they are actually pretty lenient with the 12 month requirement.
There are some portfolio lenders who have a life of loan requirment. If they catch someone, they raise the rate to the investor property rate.
Risk costs money in the form of higher rates. So, when a lender lneds on an owner occupied property, they want to make sure it is intended to be an owner occupied property, at least at the outset. They recognize that due to job changes or other circumstances they can not require someone to live there forever, so, they are actually pretty lenient with the 12 month requirement.
There are some portfolio lenders who have a life of loan requirment. If they catch someone, they raise the rate to the investor property rate.