Mortgage question

[Lumberg]

IF you have a mortgage with terms based on the fact that you are using it as a primary residence, and a few years down the road you decide to move, and rent the place out, is that a breach of contract? What are the possible consequences?

Thanks

 

[moki]

IF you have a mortgage with terms based on the fact that you are using it as a primary residence, and a few years down the road you decide to move, and rent the place out, is that a breach of contract? What are the possible consequences?

Thanks

This varies from state to state, and more importantly, from mortgage company to mortgage company. Look at your contract closely, it very likely has a clause that notes what happens in this situation.

 

[stogieman]

Ahhhhhh, don't work about it Lumby. The most they cn do is put you in jail........ :sign: :thumbs:

 

[moki]

As chance would have it, I played poker tonight with a guy who has been a mortgage broker for 20 years, and I put your question to him. He stated that as long as the new house you're buying is equal or higher value, it is not a problem at all, UNLESS there is something specific in your contract to the contrary (which he said is rare).

What will happen is your mortgage will be reviewed, but unless you are trading down in terms of value, you're golden... and apparently as long as you keep trading up there is no issue, though since it is "subject to review" I'd imagine if you made a franchise out of doing it, buying a new house and moving every year, it'd be a problem.

 

[gawntrail]

Lumberg,

When we bought our new house (5 years ago) and decided to rent the previous one, the only issue we ran into was how it was insured. Now I live in California and I think each state has its own issues as far as insurance goes, but make sure to look into this.

Also, I got some interesting information from my tax guy about rentals. IF you are interested, PM me.

M. Gipson

 

[Lumberg]

As chance would have it, I played poker tonight with a guy who has been a mortgage broker for 20 years, and I put your question to him. He stated that as long as the new house you're buying is equal or higher value, it is not a problem at all, UNLESS there is something specific in your contract to the contrary (which he said is rare).

What will happen is your mortgage will be reviewed, but unless you are trading down in terms of value, you're golden... and apparently as long as you keep trading up there is no issue, though since it is "subject to review" I'd imagine if you made a franchise out of doing it, buying a new house and moving every year, it'd be a problem.

I think the way to go is going to be to live in the house at least 2 years then move then sell it within 3 years to get the capital gains tax break (assuming th eprice has gone up)

So you only ever own 3 houses at the same time at the most.