Skip to content
×
Pro Members Get Full Access
Succeed in real estate investing with proven toolkits that have helped thousands of aspiring and existing investors achieve financial freedom.
$0 TODAY
$32.50/month, billed annually after your 7-day trial.
Cancel anytime
Find the right properties and ace your analysis
Market Finder with key investor metrics for all US markets, plus a list of recommended markets.
Deal Finder with investor-focused filters and notifications for new properties
Unlimited access to 9+ rental analysis calculators and rent estimator tools
Off-market deal finding software from Invelo ($638 value)
Supercharge your network
Pro profile badge
Pro exclusive community forums and threads
Build your landlord command center
All-in-one property management software from RentRedi ($240 value)
Portfolio monitoring and accounting from Stessa
Lawyer-approved lease agreement packages for all 50-states ($4,950 value) *annual subscribers only
Shortcut the learning curve
Live Q&A sessions with experts
Webinar replay archive
50% off investing courses ($290 value)
Already a Pro Member? Sign in here
Buying & Selling Real Estate

User Stats

4
Posts
1
Votes
Jake Collins
1
Votes |
4
Posts

Being Told New House is Too Close to Current House

Jake Collins
Posted Jan 5 2023, 14:54

Hey all,

My lender is now telling me the branch manager is getting cold feet about taking my loan because we are moving "too close" to the current home. For background, we have lived in this house for a full year. We would be moving down the road (same street name, but a five minute drive). The lender is saying they want me to provide an explanation for why we are moving or even list my house for sale. It was my understanding that after a year I can move for pretty much any reason I want and keep the old house as a rental. Am I missing something? Has anyone else ever run into this?

User Stats

2,539
Posts
2,652
Votes
Kevin Sobilo#2 General Landlording & Rental Properties Contributor
  • Rental Property Investor
  • Hanover Twp, PA
2,652
Votes |
2,539
Posts
Kevin Sobilo#2 General Landlording & Rental Properties Contributor
  • Rental Property Investor
  • Hanover Twp, PA
Replied Jan 5 2023, 15:14

@Jake Collins, the underwriter is likely looking at your debt to income ratios and concerned about you carrying 2 houses.

Since they are asking why you are moving, I'm guessing you didn't say that you plan to rent the old house. They need to know that so they understand you don't plan to own and pay mortgages on both houses on your existing income alone.

User Stats

4
Posts
1
Votes
Jake Collins
1
Votes |
4
Posts
Jake Collins
Replied Jan 5 2023, 15:15

Hey Kevin, 

Thanks for the reply! Unfortunately, that is not it because they are well aware of my plans to rent the old house and also cleared me from a DTI standpoint. Which makes this ever more strange.

BiggerPockets logo
BiggerPockets
|
Sponsored
Find an investor-friendly agent in your market TODAY Get matched with our network of trusted, local, investor friendly agents in under 2 minutes

User Stats

11,108
Posts
12,637
Votes
Bruce Woodruff
Pro Member
#1 Contractors Contributor
  • Contractor/Investor/Consultant
  • West Valley Phoenix
12,637
Votes |
11,108
Posts
Bruce Woodruff
Pro Member
#1 Contractors Contributor
  • Contractor/Investor/Consultant
  • West Valley Phoenix
Replied Jan 5 2023, 15:18

Try another lender?

User Stats

39
Posts
18
Votes
Mike Singer
  • Lender
  • Dana Point, CA
18
Votes |
39
Posts
Mike Singer
  • Lender
  • Dana Point, CA
Replied Jan 5 2023, 15:19

Hi Jake, 

I spent several years as an underwriter. I assume you are trying to claim the new one as your Primary so the financing terms are better. The deal needs to make sense if you are claiming the new one as a primary residence. If it is similar or smaller they need to justify why you would move from your current home to this one. 

The underwriter is concerned with occupancy fraud. Basically, they want to you to document that this is truly the home you would live in and not just rent it out with Primary loan terms. You can use several explanations to support your claim (Closer to kids school, more bedrooms, etc). They just want a reason. 

User Stats

4
Posts
1
Votes
Jake Collins
1
Votes |
4
Posts
Jake Collins
Replied Jan 5 2023, 15:22

Hey Mike,

Thanks so much for the info. Yes, it would be our new primary and we will be living there full time. I suppose that makes sense. Our main reason is our previous house will do so well as a rental. But there are reasons we like this house comparatively as well. I can certainly supply some.

User Stats

245
Posts
67
Votes
Jeet Sangha
Pro Member
  • Realtor
  • Gilroy, CA
67
Votes |
245
Posts
Jeet Sangha
Pro Member
  • Realtor
  • Gilroy, CA
Replied Jan 5 2023, 15:23

In their minds, you can be buying it as an investment with a primary loan. If you are moving because the family is growing and you need more space, a better school district or a work-related move then that's a compelling argument. If both houses are very similar in size and amenities then they will for sure question it.

Coldwell Banker Realty Logo

User Stats

39
Posts
18
Votes
Mike Singer
  • Lender
  • Dana Point, CA
18
Votes |
39
Posts
Mike Singer
  • Lender
  • Dana Point, CA
Replied Jan 5 2023, 15:28
Quote from @Jake Collins:

Hey Mike,

Thanks so much for the info. Yes, it would be our new primary and we will be living there full time. I suppose that makes sense. Our main reason is our previous house will do so well as a rental. But there are reasons we like this house comparatively as well. I can certainly supply some.


They just want a solid explanation of why you want to move there to document their file. In their mind you could just buy this place and rent it out after telling them you plan to live there. Its fairly common to ask this if the home is within 100 miles and similar. FHA actually doesn't even allow financing if the home is within 100 miles of the old one.

User Stats

44
Posts
45
Votes
Foti Karastamatis
Pro Member
45
Votes |
44
Posts
Foti Karastamatis
Pro Member
Replied Jan 5 2023, 20:00

Give them the real reason you are moving and if they don't like it, switch lenders. They either want your business or they don't. I quit begging people to take my money and it feels way better. They need you more than you need them. There are hundreds of lenders, brokers, credit unions, even hard money... that's really not that hard compared to todays interest rates. Use hard money to seal the deal the refi a few months after you move in. If the deal is worth doing, hard money can get it done. Would you lose a deal over a few thousand dollars? If so, maybe its not the right deal. Hard money can be the difference of making the deal or not. Just my humble opinion. Best of luck and let us know what happens.