Primary residence loans?

Question

I am thinking of using a primary reidence loan. I intend to either A) move into the property B) Flip the property or C) refinance the property after I fix it and rent it. I cannot get a investment loan for the property, but I will have good equity in the property. (as much as 65k) Any advice? If I do use a primary residence loan and do any on of the three what could happen? I am thinking of C, and when I refinance I will not use a primary residence loan. Since I have "intent" to move in will this option still be legal?

I live in a home that is nicer, but it is under a trust. Part of the reason I want to buy a second property is in case the trust goes "bad." I want to be as honest as possible, but I cannot get a no-money down loan unless it is a primary residence loan. I am not that affraid of being caught as much as if it is the right thing to do?

If I do not move in I want to refinaince to a different loan catagorey to be safe.

Answer 1

do you own any property now? If you believe that you may be living in the home, and you do not own any other property, you can do so. You certify to the bank that your intention is to move in, if for some reason it's not possible, such is life...pay your mortgage on time anyway.

What a previous soul said about future buyers won't be an issue, since the existing loan criteria is only between you, your loan officer and the bank...and most banks won't do a cashout refinance, or use a higher property value if the home was sold less than 6 months to a year prior. they want to make sure the value is really there, you may have to show proof of work done to support any higher value...

It would be a problem if you already own a home, unless the one you are buying is better or in a better area, etc.

UPDATE IN RESPONSE:
You will have some difficulty even qualifying for a primary residence loan since you own a nicer home now...it would certainly need to make sense to an underwriter, and you'll have to get a rental or mortgage history for your current residence. There are 100% investment property loans....and if you're in California, I could help you. They aren't the greatest rates, but you can still get them done if your credit is ok.

Answer 2

Not sure of the exact legalities. When you get a primary residence mortgage, you are signing and stating that it is such. The lender will have certain remedies under the terms of mortgage (read before you sign). If you really have the intent of moving in and having that as your primary residence - go for it. If you are just trying to save a couple bucks, you are violating the contract (which is a legally binding document once signed) and can be held accountable to the agreement set forth within.

Do the right thing!

Joe...

Answer 3

Actually, lenders have started checking a random number of borrowers to be sure they have moved in. Nobody has been charged with bank fraud, but you do run the risk that your loan will be immediately called for payment in full. In fact, I know somebody who - about one month after his loan closed - was contacted by the lender who sent another appraiser out to do a field review. We think they were actually checking occupancy.

Most lenders will not give another mortgage on a property where a primary mortgage was taken out in the previous six months or year. This means that it will be very hard for your buyers to get a loan.

Finally, you are acting dishonestly, which should scare your potential purchasers.

Answer 4

It's not the right thing to do.

Yes, it's called loan fraud.

You might get caught.

Doesn't sound like you have ANY "intent" of moving in.

If you do "C" and it's a HUD house - $250K fine, and 5 yrs prison.

Answer 5

When you declare you're going to live there and close escrow, they do NOT come by and check to see if you've moved in !! Just use a PO box for mail, and proceed.