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I am planning to refinance my home but I am not sure and I might rent the home in another 2-3mnths

Hello,

I am currently planning to refinance my home this week from 30yr to 15yr and I am also making a cash down payment to bring my outstanding loan value to $200,000 for the new 15 yrs loan and my house value is at $315,000. So I have plenty of equity and I have 760+ credit score.

However I could also be renting the house after 2-3 months depending on my other work situation.

So would you still advice me to refinance now as primary residence as I am not currently planning to rent the house right now and it is still occupied by me?

I thought of refinancing right now as "primary residence" and then later if required I would refinance again as "rental property".

I thought I am paying too much interest on my 30yr mortgage when I have cash so I am deciding to refinance as 15yr right now and then probably refinance again if I chose to rent the house in another 3-4 months.

Please advise as I see a mortgage disclore of "continue occupancy" so I am not sure if I am planning to do the right thing here.

Thank you so much
  • June 23 2012 - Frisco
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Answers (4)

Best Answer

You are doing the right thing by asking first. One year is the required occupancy in the mortgage note language that is signed at closing. Knowing you are considering renting out property would indicate the "right thing" would be to refinance as investment property once you make decision to relocate. If after a few months you dedide not to move, then you can move forward as primary residence refinance.
The problem with refinancing now as investment property is rate would be .50 higher, and not sure how an Underwriter would be able to evaluate ratios for qualifying not knowing your housing expenses when/if you move. Just counting current payment would not be accurate analysis as you are going to incur housing expenses in new location, too and rental income would not count.........
  • June 23 2012
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Profile picture for user8728273
thank you so much for all the answers. Very helpful. If I plan to refinance as a regular primary residence loan can I later refinance as a rental property after lets say 2-3 months when I really decide to rent?

I have heard mixed opinions.Like I said I do have excellent credit and I hope I can do that and I am okay to spend more money for refinance as my current refinance is not costing me much due to excellent credit scores and a good deal in interest rate as well.

Thank you again for your time and answer.
  • June 25 2012
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Intending on renting in 2 or 3 months(just not right away).... is not the same as 'intending to occupy as primary residence'
You would be committing mortgage fraud.... a federal crime.

Just refi as an investment property
  • June 23 2012
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Profile picture for wetdawgs
Please recognize each time you refinance you are incurring costs, therefore, discuss with your loan officer the differences between financing for a rental vs financing for primary residence.   

Yes, the "continue occupancy" signature is indeed showing your intent to keep it as your primary residence.
  • June 23 2012
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