Podcast 86. If you move, you don't have to get another loan.

[Chris Dengel]

In show 86, Corey mentioned that if you move out of your house, you don't have to get another loan. I was hoping someone could elaborate on this. Is this a loophole? 

[Bill Gulley]

I don't listen to podcasts, they usually make my blood pressure rise and I start talking to myself.

However, if it's the Corey I'm thinking of, usually fair and good stuff.

All mortgages, unless there is specific agreement with the lender otherwise, look to the one year mark as to owner occupied representations made by a borrower, if you say you're going to occupy and don't, it's fraud. No lender can require that a borrower remain in the property forever over the term of a loan except for government liens that might be financed under low income qualifications (for example, a city finances a sewer project to a low income homeowner with a forgiveness of debt arrangement, the debt may be forgiven so long as the property is occupied). So, all secondary market loans look to one year for occupancy representations. That includes Fannie and Freddie, FHA, VA, USDA and HUD programs, the same will also apply to insured banks and credit unions on loans that are held in portfolio.

After that you can move out and continue paying the loan under the same terms as if you were living there. You can rent the home, if you violate the acceleration clause or due on sale clause then you are subject to the lender taking action as agreed, at the lender's option.  Selling subject to is a violation of the mentioned clause, so is any lease greater than 3 consecutive years under one agreement. :)