Summary
Changing a propertys status from primary residence to rental can have implications under mortgage terms. Its crucial to review your mortgage agreement for any occupancy clauses that may require you to live in the home for a certain period. Contact your mortgage company to discuss potential penalties, such as interest rate increases, loan calls, or additional fees. Be transparent about your situation and prepare necessary documentation, like the closing agreement and any relevant correspondence. Discuss possible solutions or temporary allowances with your lender to avoid penalties. Consulting a real estate attorney can also provide guidance on compliance with legal requirements.Full Conversation
I recently purchased a home with my mother n law for a fresh start for her after just losing her husband. after closing on the house and moving into it, she feels she is not ready and prefers to stay with us. now I have an empty house that is supposed to be her primary residence.
Hi ****! That sounds like a tough situation. Are you considering renting out the house, selling it, or is there another plan you have in mind?
we are considering renting out the house, but there was a form in the closing documents asking if this was going to be a primary residence or rental. this was purchased to be a primary but don't want to do the wrong thing so asking.
Hey ****! It's great that you're being cautious about this. Here are a few things to consider:
- Mortgage Terms: Check if your mortgage has any occupancy clauses. Some loans require the property to be your primary residence for a certain period.
- Insurance: Inform your insurance company about the change to avoid any coverage issues.
- HOA Rules: If there's a Homeowners Association, review their rules on rentals.
You might want to consult with a real estate attorney to ensure you comply with all legal requirements.
insurance and hoa will not be an issue, the mortgage terms is why I am messaging you.
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Got it, ****. Here are a few key points related to mortgage terms:
- Occupancy Clauses: Some mortgages require you to live in the home for a certain period before renting it out. Review your mortgage agreement.
- Primary Residence Declaration: Inform your lender of any changes to avoid potential legal issues.
- Possible Penalties: Be aware of any penalties or interest rate changes due to non-occupancy.
Would you like more details on a specific point?
ok so I need to contact mortgage company before I do anything?
Case Rating: *
Yes, ****, contacting your mortgage company is a good first step. They can provide specific guidance based on your mortgage agreement and inform you of any potential penalties or changes in terms due to renting out the property. Would you like more details on any other specific points?
I am just worried on what kind of penalties I might incur as house just sitting empty now.
Case Rating: *
****, the penalties for not using the property as your primary residence can vary depending on your mortgage terms. Here are some potential penalties to be aware of:
- Interest Rate Increase: Your lender might increase your interest rate.
- Loan Call: The lender may require full repayment of the loan.
- Fees: Additional fees for non-occupancy.
Would you like to know more about any of these potential penalties or how to approach your mortgage company?
yes please
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Hi ****! When approaching your mortgage company, it's essential to be transparent about your situation. Here are some steps to take:
- Explain the Circumstances: Clearly outline why the property isn't being used as a primary residence.
- Request Options: Ask if there are options to avoid penalties, such as a temporary rental agreement.
Would you like more details on contacting your mortgage company or any specific situation?
yes please
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****, when you contact your mortgage company, consider these steps:
- Prepare Documentation: Have all relevant documents ready, such as the closing agreement and correspondence with your mother-in-law.
- Discuss Solutions: Ask the mortgage company about possible solutions or any temporary allowances.
Would you like more detailed information on a specific aspect of your mortgage agreement?
yes
Case Rating: *
Hi ****! Here's a bit more detail on contacting your mortgage company:
- Prepare Documentation: Ensure you have all necessary documents, including the closing agreement and any communication with your mother-in-law about her change of plans.
- Discuss Solutions: Clearly ask if there are options to avoid penalties, such as a temporary rental agreement or any allowances they might provide.
Would you like to know more about any specific aspect of your mortgage agreement or need help with another legal issue?
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