Buying New Primary Home And Renting Exiting Home

This BLOG On Buying New Primary Home And Renting Exiting Home Was Written By Gustan Cho NMLS 873293

There are many instances that homeowners are refinancing their current homes as owner occupied homes and then weeks after closing, they are seeking another home as an owner occupied home and planning on keeping the original owner occupied home as a rental after they close on their first home.

Buying New Primary Home After Refinancing Existing Home

Purchasing a new owner occupied home after refinancing your current home with the intent to mislead the bank or mortgage lender is illegal if the intent is to mislead the bank or mortgage lender so you can get away with putting down a lower down payment and take advantage of the owner occupied mortgage rates.

Buying New Primary Home As Owner Occupant Home

However, if you recently refinanced your home with the intent of living there for at least a year or more but had a change of heart because you saw a major deal on a much bigger home, then it can be done.  A good detailed letter of explanation will be required and I would check with a mortgage lender and explain the circumstances before proceeding.  Nothing is wrong if you did not have the INTENT to mislead the bank or mortgage lender.

Buying Another Home After Refinancing Your Owner Occupied Your Owner Occupied Home

If you recently refinanced your owner occupied home and are trying to purchase another home and really on plan in living in the new home, you can get a mortgage loan as an owner occupied home under certain circumstances.

  • Only if the deal makes sense. 
  • If you are planning on buying the new home and the new home is much larger than your recently refinanced owner occupied home and you did not have the intent on defrauding the mortgage lender. 
  • People change their minds all the time and it is totally normal to refinance your existing owner occupied home with the intent in living there and planning on doing a large room addition but later changed your mind and deciding to sell it or keep it as a rental and buying a larger home. 
  • On cases like this, it is totally alright.
  • If you have currently refinanced your owner occupied home but need rental income to qualify for your new owner occupied home, the mortgage lender will require a lease from a renter and at least 25% equity in the home. 
  • Then, 75% of the current rental income can be used for qualifying your new home.
  • If you currently have a conventional loan on your owner occupied home, you can qualify for both a conventional and/or a FHA loan for you new home purchase.
  • If you currently have a FHA loan on your owner occupied home, a second FHA loan is allowed only if you have at least a 25% equity on your first FHA loan.
  • If the new home purchase is close to your existing home and similar in market value, then it will be difficult to buy the new home as an owner occupied home. 
  • You will need to purchase it as an investment home and the minimum down payment requirement will be 20% down payment. 
  • Second homes require a minimum of 10% down payment but need to be at least 60 miles away from your primary home.

Job Transfers: Qualifying New Home Purchase As Owner Occupied Home

If you have recently refinanced your home but you had an unexpected job transfer or new job that is beyond commuting distance, you will qualify for a new mortgage loan on the new property as an owner occupant mortgage loan.  This is both for FHA and Conventional mortgage loan programs.

Borrowers can have two FHA Loans at the same time if you have a job relocation that is greater than 100 miles from your current home.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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