Primary residence becoming rental - impact on existing mortgage interest rate

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Submitted by 2012 turns around on January 23, 2012 - 9:28am

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.

Submitted by FormerSanDiegan on January 23, 2012 - 10:06am.

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).

Submitted by SD Realtor on January 23, 2012 - 10:09am.

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

Submitted by UCGal on January 23, 2012 - 10:19am.

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.

Submitted by 2012 turns around on January 23, 2012 - 10:48am.

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.

Submitted by 2012 turns around on January 23, 2012 - 10:50am.

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.

Submitted by SD Realtor on January 23, 2012 - 11:12am.

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.

Submitted by recordsclerk on January 23, 2012 - 11:14am.

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.

Submitted by EconProf on January 23, 2012 - 2:20pm.

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!

Submitted by 2012 turns around on January 23, 2012 - 3:05pm.

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.

Submitted by SD Realtor on January 23, 2012 - 6:25pm.

Excellent news and good job!

Submitted by EconProf on April 18, 2012 - 7:26am.

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.

Submitted by sdduuuude on April 18, 2012 - 9:28am.

SD Realtor wrote:
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.

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 ?

Submitted by heywood on April 18, 2012 - 9:42am.

My refi documents said 12 months.

Submitted by SD Realtor on April 18, 2012 - 7:10pm.

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.

Submitted by Hatfield on April 18, 2012 - 10:53pm.

EconProf wrote:
And next time, please proofread what you just write.

Hello Pot? This is Kettle. :p

Submitted by aronhally84112w on April 20, 2012 - 3:40am.

On mothers day working mom expects a nice constitute from her kids mothers day facebook status. She is working mom, she can buy some she can give

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