Owner occupant clause?

Hi Ry,

Welcome to forums.

If there remains a clause that you'll have to occupy the property for at least 1 year after refinance, then you should stick to it or else the lender may call the loan due. You need to check out the loan docs and find out if they speak of any action to be taken by the lender in this case. By the way, can you tell me what exactly the clause states?I'd like to see it and then probably things would be more clearer.

As for what you should do now, check out the loan docs first and then talk to the broker as he is helping you get a loan from the same credit union with which you've refinanced right? With the help of the broker negotiate with the lender not to call the loan due and resolve the issue through some cash payment. I don't know whether this will work but that's what I can think of right now.

Thanks

It basically says that we agree to occupy for at least 12 months or they may immediately call the loan due and/or they can raise the interest rate to match that of non owner occupied.

Ok Ryan, since you have already signed on the Purchase and Sales agreement, and you don't want to move back from it, the only way is to accept higher rates as applicable for non-owner occupied properties. Are you ready for higher payments?

yes, i agree...it sure seems you will be subjected to the higher, non-owner occupied rate of interest. of course, you would be well-advised to state your case for moving. not every lender is thin-skinned and unmovable. you may just be able to maintain your more favorable interest rate by seeking their favor.

What will happen? Nothing most likely? ...unless you walk into the lobby of the credit union and announce it or if you change your mailing address for the rented house to come to you. Technically, you can either have the note called due and or have your note modified to a NOO (Non Owner Occupied) loan rate. So it depends on how financially well off you are that can pay for morally right actions?

This is common. People buy a house, get another after awhile and rent the old one. I've been a Broker for 30 years and it happens all the time. If you do nothing, chances are nothing will happen. It's like paying your taxes... when in doubt about a deduction, some people wlll take the deduction and some people won't.

What's the worse that can happen...probably have the note called. OK so you refi and get another loan without that clause. This came from a credit union and they have a lot of their own rules... I doubt if you find that clause in the normal FANNIE MAE/FREDDIE MAC arena. There are buyback clauses that lenders be us Brokers up with... that's when a loan is refinaned within 90 days of closing. There are also Prepay Penalty loans where you are subject to 6 monts insterest if you pay it off in a certain time, usually 2 yrs. Owner occupied clauses are not common, so this must be a credit union clause? I don't know your locale but the last place I would go for a mortgage loan is a credit union. You can generally do better elsewhere.

Ed Boyd, WA licnese # 510LO34761

in response to your last comment, ed..."the last place i would go for a mortgage loan is a credit union" struck me funny.

truly, until sub-prime became fashionable, the last place you might go for a mortgage loan and obtain it with poor credit was a credit union. i can cite you at least 5 specific instances in which i, as a lending manager at a credit union, made mortgage loans to borrowers who couldnt have received similar service with a broker, a bank or a lender of any other stripe - especially when taking into account the interest rate.

credit unions are more forgiving than any other lending institution, including fha. people with sub-500 scores are currently obtaining loans at credit unions in my locale (connecticut), yet nobody else will touch them.

oh well...

as for the owner occupancy clause, i believe you are correct in saying that it is a credit union-specific thing, and more than likely, specific to that particular credit union. i also agree with your assessment of the overall situation...just had to chime in when you made that final comment.

I recently signed for a house for my sister who couldnt get a loan I dont live there but the payments are up to date and would like to re-finance as a Non -owner occupied house Its only been a about a year since I signed . Can i refinance?

randy, is it that the title to the home is in your name only? does your sister have no ownership interest?

as for refinancing, you ought to be eligible; whether you can or not depends on the value of the home, the balance, your credit, etc. as always.

Hi,
I have a related question....
I may be getting a higher paying job (more than twice the pay than currently) in the new year.

I currently have a condo and I'm thinking about refinancing into a 30 year fixed it when I hear about the job (2 years left on a 7 arm, graduate student). Then I was thinking about getting a foreclosed house near by a month or two after that (first event: January-February, second event: april-july).

I don't want to bust into investments so I was going to try and get loan with less than a 20% down payment (credit: 777). I'm not sure how the banks would look at my paycheck prior to the new job...so I could find a cosigner that could back me up.

Do you have any general advice?

My concerns:
I don't want to get hit with a owner occupied penalty when I leave the condo (probably a bank of america refinance).

I'd like to know how feasible getting a 100%/90% mortgage is for a foreclosed house at the moment (very good neighborhood). I'd probably have access to a VA loan with the next 3 years after that so I could refinance the second property later.

Thank you for your input.

PS
If I don't hear a reply here, I think I will repost this as a new question.

I'm a dude, not a woman wearing a hat.

If I did such a refinance, is my credit going to get dinged really badly?

Hi Sean,

If you want to retain your current property for a longer period of time, then it would be a good option to refinance the loan. However, as you're planning to buy a new property and if it's not possible for you to afford both the loans, then your best bet would be sell off the present property. A refinance will not affect your credit but if you're unable to pay off the dues, the late payments would badly affect your credit and may also lead to a foreclosure.

You can sell off your present property, clear off the dues of your lender and then look out for a new loan to buy a new property.

Thanks

Thanks Mr. Shogg,

I have a renter lined up that could occupied it and pay for the first property's mortgage as well as an additional $150 a month.

In addition, within two months of acquiring the second property, my salary would double and I could afford paying for both properties without any impact except for not having a lot of excess income to invest into stocks. I'm near a university so I'd rent 1 to 2 rooms in the second property, which would free up more cash flow.

The only reason I'd be doing a refinance is that I'd want to fix the first property at a low interest rate. If I were having problems keeping my current place, I wouldn't be thinking about expanding to a second property.

In other words, I'm not part of the current economic problems. I got a 7-1 ARM because I expected to move out in less than 7 years as most first time home owners do. The market is providing a better opportunity.

And I can cover the additional expenses until that salary comes in...federal employment.

Welcome back Sean,

In that case, you'll have to speak to your current lender and check out if he's ready to refinance the loan. If there's equity in the property, then the lender would not deny the refinance.