Mortgage Question & Renting

[allus70]

We made up our mind, we want to move to the Villages. However, we still have to clear up some business here back north, things like selling our home, and pushing out our millennials returnees. Other than that, we have a question.
We found the village and the house we want. We have been considering buying it now, and renting it out until we can get down here. The bank is willing, but there is a stipulation, and that is if we rent it out long term, it is considered an investment property, and the interest rate is 1/2 point higher.
Anyone out there with experience in this matter? Suppose we agree to rent it out monthly at the lower interest rate, and then say six months or one year from now , we decide to rent it out on a long term basis. Can we do this? How will the bank respond?
What would happen if we started the rental process at the higher interest, that of a long term rental and then in a year made the break and moved. Would we be saddled with the investment rate for the remainder of our mortgage?
Any insights would be welcome.

[JoMar]

Don't think the advice here will be helpful since the final decision on the impact to you will be your bank. I would also shop several mortgage sources and see who gives you the answers you want.

[NavyNJ]

We made up our mind, we want to move to the Villages. However, we still have to clear up some business here back north, things like selling our home, and pushing out our millennials returnees. Other than that, we have a question.
We found the village and the house we want. We have been considering buying it now, and renting it out until we can get down here. The bank is willing, but there is a stipulation, and that is if we rent it out long term, it is considered an investment property, and the interest rate is 1/2 point higher.
Anyone out there with experience in this matter? Suppose we agree to rent it out monthly at the lower interest rate, and then say six months or one year from now , we decide to rent it out on a long term basis. Can we do this? How will the bank respond?
What would happen if we started the rental process at the higher interest, that of a long term rental and then in a year made the break and moved. Would we be saddled with the investment rate for the remainder of our mortgage?
Any insights would be welcome.

Don't overthink this whole thing......you may have already discovered your best option and just not realized it! Good luck on the move to TV when you're able to make it!! :)

[villager]

There are a couple considerations. If you say you INTEND to owner occupy the home and then change your mind, it will be hard for the bank to do anything because it is hard to prove intent. On the other hand, if you say you will owner occupy and rent it out and the lender (or servicing company) finds out (via the mailing address you use on your insurance policy, correspondence from the bank, etc.), the note and/or mortgage will most likely have the stipulation they can call the note due. It is a chance you take. Why not do the right thing from the start and present your case properly and ask the appropriate questions up front? That way, you know your options and don't have to worry about looking over your shoulder with worry on the "what if". Honesty is always the best policy in any dealings!

[manaboutown]

Over the last several years I refinanced two separate single family residences to obtain lower interest rates. One I financed as a second home, the other as a rental/investment property.

If I recall correctly when I signed the mortgage documents on my second home I had to sign a paper stating that I was actually using the property as a personal residence and intending to continue to do so (indefinitely). Since a mortgage lender receives updated copies of the insurance policy on a property at its yearly renewal a policy can of course be checked by the lender see if it remains a homeowner's policy.

Refinancing the rental property required I pay 1/2% higher rate of interest. That property is insured as a rental property and of course that lender requires a copy of the insurance policy on the house at each renewal.

Now one could opt to inform the lender he wanted an owner occupied mortgage and insure as a homeowner while planning to use the property as a rental, then doing so. I call that living dangerously. To more or less quote Warren Buffet we find out who has been swimming naked when the tide goes out.

[joec3]

I think you need to be upfront with the mortgage and insurance companies. If you are not honest it could come back to bite you in the end. If you are renting and something bad happens then the insurance company could refuse to cover your loss and you would be on the hook for the loss. your bank may also have something to say about the fraud you perpetrated against them. Do the right thing and sleep at night. Good luck with your purchase