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FHA mortgage on rental property

We would like to rent out our current home, which has an FHA mortgage. We would like to refinance to lower the rate through the streamline program. However, I am afraid of being in violation of the primary residence terms of the FHA mortgage. The mortgage on the new home would not be FHA.1. If I keep the original mortgage (closed in October 2008), am I OK to vacate the residence and rent?2. If I decide to go ahead with the refi and rental, how does the FHA or lender enforce the primary residence provision? Do they call the loan? by t.d.mc_983_849 from Grand Rapids, Michigan. Dec 13th 2011 Reply


Jamie Nummer (SomersetLendingCorp)
#29 ranked lender in Michigan - 86 contributions

Great question! Thank you for posting your question. You will get a different answer on this depending on what lender you speak with. No matter what FHA allows, some lenders actually have their own approach and choose not to do this loan becuase of risk. You can actually do a streamline refinance on this mortgage even with it being considered an investment property. The thing that you will have to be able to show here is that you are required to move because of work, or some other situation in your life that makes the move necessary. If you have other questions or need additonal guidance, please feel free to let me know.Jamie Nummerjamie@somersetlendingcorp.comOffice 248 499 9640

Dec 14th 2011
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Bert Carpenter (BertCarpenter)
#42 ranked lender in Arizona - 1,731 contributions

You should probably tread lightly here especially if you are planning to move out of the home shortly after you refinance. When you bought your home using FHA, you signed a document called an "Affidavit of Occupancy" wherein you certified that it was your intent to permanently occupy the home as your primary residence. Several years have passed and FHA knows that people's lives change. If you needed to or wanted to move now and convert the property to a rental, FHA would not care as long as you kept up your payments and insurance. If you refinance now, streamline or otherwise, you will be required to sign a new affidavit certifying your intent to remain in the home as your primary residence. If you were to attempt to buy a new home in the next 6-9 months, vacating the existing home, (unless the move was a result of a job relocation, etc) FHA could claim fraud on your part. Fraud could result in either calling the loan or criminal prosecution. If you are going to refinance now, you really shouldn't start looking at another primary residence until late next year or early 2013. Either way, remember, FHA will only allow you to have one FHA mortgage, since you can only have one primary residence. I hope that helps.

Dec 13th 2011
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Robert Hanson (rhanson)
#41 ranked lender in Maryland - 637 contributions

I have a little bit different take on it than the first answer:You can refinance this home with an FHA streamline as an investment property. FHA allows a streamline on a property that was purchased as a primary residence and is now (or will be) an investment property. Under certain (very limited) circumstances you can even purchase a new home using an FHA loan. If you know that you are not planning to occupy this home, you should not do any financing that does not acknowledge this fact, but FHA allows for your situation. Not asll lenders offer this FHA program for investment properties, but I can assist you with it if you wish. You can reach me at rhanson@westtownsb.com.Good luck!

Dec 14th 2011
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 4,753 contributions

You can streamline right now as owner occupied since you actually still live in the home. You will sign another affidavit of occupancy stating you will occupy the residence. Under this, you have to live there for 1 year.. If your intention is to start immediately looking for another primary residence, you can refinance streamline as an investor.. slightly higher rate, but same process... WilliamAcres.com

Dec 14th 2011
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