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Originally Posted by Single Track
I need some help real quick because I have put a deposit on a Fernandina patio villa and am now dealing with Citizen First mortgage. When I mentioned to them this morning that I might have to rent it out for Dec thru Mar each year to help with expenses, they said the mtg. rate would increase from 3.75 to 4.75. I would live there for most of the rest of the year. I then said "never mind as far as you're concerned, I'm not going to rent it out". He was okay with that but he warned me that when I go to get insurance, I will need renter's insurance and that the insurance company will notify the bank and the bank will recalculate my rate back to the 4.75 or whatever it happens to be at the time. They have me over a barrel. Even in a year or two if I don't have to rent it, the rate will not go back to 3.75. It is a lifetime of paying the higher rate.
Do I really need renter's insurance? Would a property management company require that I have renter's insurance?
Please give me some of your expert advice asap.
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From the banks point of view they want to know if this is your primary residence or a second home or business property. The risk is higher on a property that is not your primary residence and thus the rate is higher.
If you are going to be living in the home more than 6 months and are making Florida your residence state then I think you shoud qualify for the lower rate so check at other mortgage co's. The insurance company will also be concerned with the number of months the home maybe vacant and they may not want to insure the property at a standard rate if it will be vacant for longe periods of time. You will need an insurance policy that provides for rentals and you proably will need someone to look after the property etc.