Primary residence becoming rental – impact on existing mortgage interest rate

[2012 turns around]

When changing the primary residence to rental, what happens to existing mortgage loan and its rate? Will the lender force to refi it with a higher rate or just bump up the rate without long refi process?

I have a phenomenal 3.25% 15 yr on my primary which I am starting to rent it out from end of this month. I am calling the lender and insurance to notify the change of occupancy status. Wondering what I will expect.

[(former)FormerSanDiegan]

Generally speaking your loan terms are defined when the deal closes. Your rate is your rate.
It won;t change (unless it specifically says it will change, e.g. if it is a variable rate loan).

How long have you had this loan ?

Do the terms of your loan require you to notify the lender as to a change in the status of use of the property ? (I doubt it).

[SD Realtor]

Agreed with FSD. Why are you calling the lender to notify them?

[UCGal]

Agreeing with the others.
But I *would* call the insurance company.

Also – if you are claiming the homeowners exemption for property taxes, technically you should notify the county. Most folks wouldn’t bother till they bought a different property that they wanted to claim the exemption on.

[2012 turns around]

I called the lender to change my address and subsequently they sent me a short questionnaire asking the reason for address change – whether it is a temporary addr change or property going to a rental.

[2012 turns around]

The refi was done just barely 3-4 months ago. I did not recall whether there were such terms in the agreement but I will check it though.

[SD Realtor]

When you did the refi did you state it was for owner occupancy? If you did then you may have some explaining to do.

Good luck.

[recordsclerk]

I just did the same. I called lender for change of mailing address. I didn’t have to give any more details. I also refied about 6 months ago. I didn’t get that great of a rate- 3.75%/15 yr. I missed the bottom on the rate. I did do OK on the new primary loan 3.85%/30 year.

[EconProf]

The rate of return for buying and immediately renting out a house as an investment is poor due to the high interest rate and high down required by lenders. However, you have the advantage of a great interest rate that just might make it profitable in the long run. Good luck!

[2012 turns around]

This was primary residence for last 10 yrs and I had never thought I will be moving out of this home when I refi’d it in Sep last year. As I wrote in another post, I closed an excellent deal on Dec end on a shortsale – which happened all of sudden in just 30-40 days. So I moved to this new home last week and the query from the lender came when I called them for address change.

Btw, I called the lender customer support and she explained there is formal and will have no impact on the interest rate. Thanks everyone.

[SD Realtor]

Excellent news and good job!

[EconProf]

You also can’t use the english language.
Do us all a favor. Read out loud, to yourself, word for word, what you just wrote. See if it makes any sense. And next time, please proofread what you just write.

[sdduuuude]

[quote=SD Realtor]When you did the refi did you state it was for owner occupancy? If you did then you may have some explaining to do.

Good luck.[/quote]

Hey SDR – What do you think is enough time between an owner-occ refi and a move-out such that the lender couldn’t really do anything about it ?

[heywood]

My refi documents said 12 months.

[SD Realtor]

Different lenders vary but I think they usually put 12 months in the documentation. I have seen other posters post about this and they simply called the lender and informed them and I don’t believe there was any recourse.

[Author]

Posts