I've been considering buying a home, living their for 6 months, turning it into a rental property, and buying a new one the same way to do the same thing to.I intend on using an owner occupant mortgage to accomplish this. Is their any legal pit falls that I should be aware of?
2007-08-12 05:52:31 · 7 answers · asked by Natasha G 1 in Business & Finance ➔ Renting & Real Estate
It becomes mortgage fraud because of your intent. Most mortgages will ask if you intend to occupy the property for a year.
If you live there for a full year though, then you'll be ok to move and buy another.
You will not need to refi to an non-owner mortgage if you move after a year.
Welcome to the world of landlording.
http://www.prepaidlegal.com/hub/DarrinCarey
2007-08-12 10:14:46 · answer #1 · answered by PersonalFreedom 4 · 1⤊ 0⤋
When you apply for the 2nd mortgage , either it will become the owner occupied ( and the first lender may have provisions regarding non-owner occupied ) which would kick in when you apply for the 2nd mortgage .
And FYI , very few rentals cover the cost of a mortgage less than 5 yrs old (due to rental rates) .
How will you cover the shortfall ?
The bank will ask this when you apply for the 2nd and expect you to have the income to cover the 2nd and the shortfall (plus any adjustments the 1st lender makes because of non-owner occupied) .
There are no secrets in this if you borrow because ALL records are examined prior to granting the loans .
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2007-08-12 06:03:39 · answer #2 · answered by kate 7 · 0⤊ 0⤋
The big pitfall is you can not claim owner occupant if after 6 months you will be using it as a rental. Also you lose the chance to benefit from capital gains as you must own a property for 5 years, live in it for two years (permanent residence). These types of transactions are considered investment properties.
2007-08-12 05:58:54 · answer #3 · answered by Anonymous · 1⤊ 0⤋
It could be consider mortgage fraud that you turn a personal property into a rental, with full knowledge of your intentions prior to obtaining the mortgage.
2007-08-12 06:05:02 · answer #4 · answered by Anonymous · 0⤊ 1⤋
Yes, you are commiting mortgage fraud. This may not show up with the 1st or second loan but by 3 they will recognize what you are doing.
2007-08-12 05:58:32 · answer #5 · answered by Anonymous · 1⤊ 0⤋
This is mortgage fraud and it's Federal (FBI). Good news you will have free rent for a long time in Federal prison.
2007-08-12 11:00:55 · answer #6 · answered by Leo F 4 · 0⤊ 0⤋
definite you may...yet while they settle for it, it is going to probable be at an fairly extreme pastime fee ...... and you better have some good factors avaialble as to why you prefer to do it, plan, etc.
2016-10-15 02:00:36 · answer #7 · answered by ? 4 · 0⤊ 0⤋