What should anyone do with their mortgage when they leave their main home for a new place? Do you need to tell your lender and change it to a rental property? Is refinancing necessary?
If you are renting it out, call your homeowners insurance company to tell them it is now rental property. You usually don’t have to inform the lender unless it’s an FHA loan and you are moving out before owning it for a full year after closing. If you tell your insurance company, your costs may go down since it’s not your main home anymore. Primary residence insurance generally covers personal belongings, which makes it more expensive.
@Vic
What if it’s still your main home but you rent a room? How does that change things for insurance?
If your state has property tax exemptions, you should contact your local property appraisal office to inform them you’ve moved.
No, you don’t have to inform the loan servicer, and refinancing isn’t necessary. If it’s been less than a year since you bought the home, you might risk the loan servicer saying you misrepresented your situation to get a lower interest rate. Be sure to notify your insurance company of the change so they can properly cover the home.
You don’t really need to do anything. Depending on the mortgage terms, some require you to live there for a couple of years before you can do anything else. I’ve turned my primary residence into a rental three times without informing anyone except my homeowner insurance.
If I’ve moved into my investment property, can I get some benefits like lower interest rates?
Clair said:
If I’ve moved into my investment property, can I get some benefits like lower interest rates?
Maybe. But I think you’ll have to refinance, and it depends on the current rates.
You usually don’t have to worry unless your loan documents say otherwise. Check those first, and then you can decide what to do next. Normally, as long as the payments are coming in, everything is fine. Thanks, Matt!
Nothing at all! Just move on. I think if it’s been more than 12 months, you should be good.
Make sure to call your insurance agent since your policy will need to change to a Rental Dwelling Policy.
Loans for primary residences, like FHA loans, usually require you to live there for two months after closing and for a full year. If you are moving, it’s best to send a letter to your insurance agent and lender explaining the situation.
@Vesper
What about if I move after 12 months?
Shannon said:
@Vesper
What about if I move after 12 months?
No one cares after 12 months. You’ve gone past the occupancy agreement from when you closed.
Shannon said:
@Vesper
What about if I move after 12 months?
Don’t do anything with the lender. Your homestead will change, and your homeowner’s insurance will update itself. That’s all there is to it.
I think this only matters if you bought a house that already had a mortgage. If you have a main home and buy another, your lender might ask for 10% down since it would count as a secondary home. Any extra property would be seen as an investment and need a 20% down payment.
@Sonny
That’s not true. You can keep buying primary homes as long as you live in them as your main residence for at least a year. A secondary home is a vacation place, while an investment property is rented out right away.
@Sterling
That’s how you can collect houses when you’re young and moving is easy.
@Sterling
Really? Can a secondary home serve a purpose other than being a vacation spot? What if I want to rent it part-time?
Sonny said:
@Sterling
Really? Can a secondary home serve a purpose other than being a vacation spot? What if I want to rent it part-time?
You can short-term rent it out for part of the year too.