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FHA Refinance Occupancy Requirements

I'm seeing what seems like conflicting information online about FHA occupancy requirements.  I've been living in the house for about 4 years but want to leave the option to rent it out open.  Is occupancy requirements determined by the lender?  Does FHA have any explicit occupancy requirements?  The lender I'm talking to says as soon as the refi goes through I'm technically ok to rent but the documentation he sent doesn't explicitly spell that out and does mention occupancy in several places.
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December 02 2012 - US
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Best Answer
Yes, all Government loans (Ginnie Mae) & Conventional Fannie Mae & Freddie Mac loans have this 12 month requirement. The language is in the Deed of Trust that you sign at closing. You don't see this document until you actually sit down to sign your loan documents. 

Ask your mortgage broker to read Section 5 of the Deed of Trust & see if he/she changes their stance. Better yet, have them forward you a copy of the Deed of Trust & read Section 5 yourself so you feel confident in your decision. 

All the best,
Ros

Roswell Moore, CMPS
Certified Mortgage Planner
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December 03 2012
All the documents only stipulate that you occupy the property at the time of closing as your primary residence and that you do not have it currently listed for sale. Once the loan closes there are no restrictions on what you do with the property at that point."
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he lied to you.

Ask him to explain why this paragraph from the FHA security instrument won't apply to you (you'll be signing it at closing):

 Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application;
Leaseholds.Borrower shall occupy, establish, and use the Property as Borrower's principal residence within sixty days
after the execution ofthis Security Instrument (or within sixty days of a later sale or transfer of the Property) and shall
continue to occupy the Property as Borrower's principal residence for at least one year afterthe date of occupancy.....
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December 03 2012
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Thanks to everyone who answered.  Is the 12 month occupancy requirement true for every FHA loan?  I specifically asked my mortgage broker who said:
"All the documents only stipulate that you occupy the property at the time of closing as your primary residence and that you do not have it currently listed for sale. Once the loan closes there are no restrictions on what you do with the property at that point."
My concern is I could not find anything in the documentation he sent (so far) that clearly spells the above out.  Do conventional loans have any occupancy requirements normally?
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December 03 2012
If you refinance through FHA you will be signing a new occupancy agreement committing to use the home as your primary residence for one year.  If you know in advance you will be moving out of the home within the first year of the loan then don't refinance as a primary.  If you have the equity you could refinance using investment property terms with a conventional loan and you would be free to move out as soon or during the refinance process.  Refinancing as a primary and moving out shortly there after could be considered lender fraud, not a good idea. Good Luck
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December 02 2012
Be careful with your refinance... 

Once you have occupied the property as your Primary Residence for 12 months, then you can rent it out, unless you receive permission from your lender to rent it out prior to the 12 month waiting period, otherwise it could be considered loan fraud.

If you refinance your home as a Primary Residence, then try to finance another Primary Residence purchase loan before the new 12 month time period ends, you will be denied because of the recent refinance of a Primary Residence within a 12 month period. 

If you are intending to rent your home prior to waiting for 12 months, then you could refinance your home as an investment property (NOO) & your new purchase loan would not be jeopardized.  

Please feel free to contact me directly if you have any further questions, I'd be glad to help.

All the best,
Ros

Roswell Moore, CMPS
Certified Mortgage Planner
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December 02 2012
If you are living there now you have to refinance as primary. There is no way to document it as an investment. What state are you located in? Run rates with a few lenders and make them compete for your business. See my reviews and fell free to reach out.
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December 02 2012
 
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