Selling owner occupied house

6 Replies

I have been looking and searching online but have come across different answers. Any penalties or is it common to get fined when you buy a house as a primary residency and fixing and selling after 3 months+ but in less than a year. 

As far as a mortgage standpoint, you need to hold the mortgage for 120 days without any pre payment penalties. 

120days is fine. My Idea is to buy a house with a renovation loan and sell after the rehab is done but would not like to run into any legal issues. 

What type of loan are you getting? Owner occupied will not have pre-payment penalties, NONE from institutional lenders but you can have with a commercial loan.

Sounds like you want to use OO loans, move in, fix and flip, that takes you down the mortgage fraud road as you didn't disclose your intentions as to obtaining a residential loan.

You can buy and with good cause, not be held to the one year occupancy, but what is your reason of selling? You could leave in 2 months if you lost your job, no issue. But, going in, rehabbing is a horse of a different color, you went into a commercial loan category claiming your intent to reside there.

Are there penalties? Yes, it's mortgage fraud, depending on who the lender was and the type of loan, they can just flip the issue to a prosecutor. Fines can be $100,000 and/or up to 10 years in a federal prison, doubt you'd get the max but you can certainly be hammered and people are hammered everyday I'm sure. Proving intent is not hard, you just posted the question and the fact that you sell will seal that.

You might weigh the consequences of dodging some rules, dodging financing rules really aren't worth the chance and the chance of your plan being identified is about 100%. Early payoffs are red rockets carrying red flags with sirens blasting.

Why is it that investors, especially young investors, are always looking for way to circumvent, get around, get over on the system?  They need to get over it, there are no ways at all to cheat the financial system in real estate deals without being caught eventually, doesn't exist and some newbie type sure won't be successful. Just follow the regulations! :) 

Well thank you very much. Is not that  I'm trying to cheat the system, is that I'm ignorant in that aspect and that's why I ask the questions here. Would definitely like to go the legal route no doubt.  

What if you buy it as a rental investment property, rehab it and 6 month down the road decide to sell it? 

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