If I buy a townhouse as owner occupied can I rent it? can the morgage company find out?

Answer 1

Be very careful with this!

Like the first responder said, if you live in the home and rent out a room or two, it's still considered "owner occupied." Also, you can buy a duplex, a triplex, and even a quad-plex, and if you live in one of the units and rent the rest, it's still considered a primary residence.

However, if you sign on the dotted line for the lender that this will be your primary residence, but you do not occupy any of the units, then you are committing mortgage fraud.

The chances of getting caught are probably low, but it just ain't worth the risk! Buying a home is the biggest investment of your life, and not worth taking a gamble with it...

Answer 2

If you live there and rent out a room or two, that's still owner-occupied. If you rent out the whole place, that's rental property and in theory would be a breach of contract. Normally banks charge higher interestate rates for rental property. You signed contract stipulating that you live there to qualify for the low rate. In reality, I'm not sure the bank finds out though. I've never heard of a case where a bank hires a detective to spy on you.

Answer 3

What you're talking about is called mortgage fraud and it is a crime. The lender can call the note due and the FBI can send you to prison.

This type of fraud is going on alot. Unfortunately, the only people in a position to fix it are part of the crowd benefiting from it - the loan officers, buyers and Realtors.

To all Realtors and loan officers out there: Please do report all cases of fraud to the FBI as well as your state's department of mortgage and lending. Only by doing this will we be able to clean up our own industry.

Answer 4

teran_rea is right. All you have to do is brag to the wrong person and they call the bank or the feds and it gets you a very structured lifestyle at a Federal Facility. Everyone is trying to work an angle. Aren't there any honest people out there anymore?