Primary residence to Rental

7 Replies

Hello

I have an FHA mortgage on my primary residence. I have owned and occupied this single-family home for 2.5 years, and mortgage payments are current etc.

I am relocating soon  (but not purchasing a new property) and I want to rent out my home. Tenants will be required to get renters insurance.

What are my obligations to my lender and insurance co ?

Am I required to refinance?

Should I expect my insurance rates to go up considerably?

Even if not required to refinance, should I consider it, to save $ ? (I purchased at a pretty good rate 3.8)

Thank you for any leads or answers!

You dont have to do anything other than list it for rent. Your insurance will probably go down (mine did), because you dont have any personal property to cover. You likely wont ne able to refinance lower than 3.8% so I wouldn't do a thing

Thank you so much for replying about the (unnecessary) refinance!

I was under the impression that FHA loans have different requirements. But sounds like you are both saying I just have to change insurance status from primary residence to rental - does that sound correct?

Originally posted by @Erika M. :

Hello

I have an FHA mortgage on my primary residence. I have owned and occupied this single-family home for 2.5 years, and mortgage payments are current etc.

I am relocating soon  (but not purchasing a new property) and I want to rent out my home. Tenants will be required to get renters insurance.

What are my obligations to my lender and insurance co ?

Am I required to refinance?

Should I expect my insurance rates to go up considerably?

Even if not required to refinance, should I consider it, to save $ ? (I purchased at a pretty good rate 3.8)

Thank you for any leads or answers!

 Erika, you will want to reach out to your insurance agent and change your policy from an "Owner Occupied" policy to a "Non Owner occupied" policy.

Your Homeowners policy can deny claims if you represent it as your primary residence, but are actually renting it out.

Cost should not be much different.

Just some advice - I did this with my first property, also on a 4.5% FHA loan and I lived in it for 7 years before moving out and making it a rental. Make sure the numbers make sense in order to rent this property out.

I wanted to start as an investor 4 years ago, and used my primary residence (after we moved out) to make it work. I wish I knew then what I knew now - I didn't properly run the numbers, overestimated the tenant market/rents for my property, and didn't manage my tenants well. 

Long story short, the property was severely underperforming (losing money) and the numbers didn't add up; I sold the property for a bit of proceeds I'm using to buy the next property which should perform appropriately.


I'm sure because you are a BP member (and hopefully more studious than I was when I started) you've already run your numbers and things look good. :)