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Refinancing under HARP2 and want to buy a 2nd home as primary residence soon after closing on re-fi.

We are currently in the midst of a HARP 2.0 re-fi on our primary residence of 9 years. When the re-fi closes, we would like to purchase a 2nd home and make it our primary residence and rent our current home out as it will be an excellent rental (especially at our newly financed mortgage payment) and we desperately need to buy a larger home to better fit ourselves and our 3 children that we didn't have 9 years ago. Will we be told we cannot buy another home for 12 months as was told to me by a friend? by ksimps_964_149 from Phoenix, Arizona. Mar 1st 2012 Reply


Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 4,729 contributions

You may be flirting with danger. You are claiming the current home as owner-occupied, which it is today. But, your INTENT is that it won't be soon. If you close on the refi, and then immediately attempt to buy a new home, the refi could likely be considered occupancy fraud. Lenders also do behind the scene checks, and the new lender will know you just closed and claimed the old home was "owner occupied". There is a huge chance that for the first year, any new home lender will give you a loan, but may only let you buy under non-owner occupied loan rules which has a higher rate, and slightly different guidelines. Occupancy fraud is huge, and lenders are highly aware of tricks consumers try.

Mar 2nd 2012
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Bob McCormick (BobMcCormick)
#50 ranked lender in Arizona - 5 contributions

Yes, your friend is correct. Being that you are given owner occupied rates. However, you may be able to qualify this as a rental home now for full disclosure to lender (as Harp 2.0 allows this). Bob McCormick

Mar 1st 2012
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Heath Symonds (hsymonds)
#82 ranked lender in Arizona - 5 contributions

Be very careful. Occupancy is a very important. Be very upfront with your lender as to your intent. You may be able to refi your current residence as a rental. Heath Symonds.

Mar 1st 2012
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Bert Carpenter (BertCarpenter)
#1 ranked lender in Arizona - 2,431 contributions

Enter your answer hereYour friend is both right and wrong. You can buy a new house anytime you want after you close escrow on the one you are re-financing. The problem is you cannot buy it as your primary residence or make it your primary residence for at least one year after you close escrow on the refinance. Doing so in today's climate would be considered fraud. Needing a larger home for a growing family is a valid reason for converting an existing home into a rental and buying a newer one for your residence, you just can't do it right after you refinance. Your options will be to either stop the refi, and buy a new primary residence and then refi as an investment property under HARP 2.0 (which will mean a higher rate on the refi), continue with the refi, buy a new home as an investment property (meaning a higher rate, larger down payment and reserve requirements) or do the refi now and wait for a year before you make the change. Just in case you think you could do it and get away with it, you won't. A buddy of mine that works for one of the biggest banks told me that they actually have hired a company that sends people into the field to knock on doors under various pretenses just to make sure the person that answers the door is not a tenant. He also says that when that happens they have the right, and have in fact, called the note due and payable and in at least one case it has been turned over for fraud. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com

Mar 2nd 2012
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Bert...can you expand on your statement? Do you mean that OP can refi primary then legally purchase a second home as an investment property to live in before the end of the year?

Jul 7th 2012
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