changing terms after refinancing

7 Replies

Is there any way to change the Occupancy clause after a refinance? We purchased a Triplex in Salt Lake City, UT in January of 2017 on an FHA loan, put some sweat equity in it over the course of a year and refinanced out of the FHA to a Conventional loan with with 25% down. We didn't have a great experience with the lender during the refi process. I then put an offer in on a property down town and my new lender asked me if our refinance required owner occupancy. I told her it didn't cause this was the whole point of our refinance in the first place which was to get out of PMI and so we would get to buy another property. So, she had me pull out my refi packet and sure enough it says we have to occupy for a year unless the lender put in writing that weren't required to. This fact was never explained to us, our lender never asked us if we intended to occupy. This is a big, 12 month problem for us. The loan is now sold to FNMA. Is there any way to get the occupancy changed without having to refinance again? Thanks in advance for your thoughts.

Hi! @David Healey No way to change to loan terms once the loan is in place.

Even if you had told the lender to do it as in investment, they wouldn't have been able to since you lived there. It was your primary residence. So no fault of the old lender.

Your options are to wait the 12 months OR refi it again.

Actually, right now I don't think you have much of a problem, maybe a month or two. Usually, you have 60 days to occupy by the letter of the owner oc loan from the date of closing . If refi was January 18, an you make an offer in Sept/October, close November and can occupy as late as January completely legit with no extenuating circumstances. Also, I believe  a lot of lenders would be ok on an extension if the sellers were waiting for suitable housing, job prevented move in for a limited time but you plan to do so, etc. and you have a written statement. And maybe the seller would take a longer close for extra earnest money.

Check the paperwork, of course, and it wouldn't be perfect but you are closer to the timing working than not and lots of ways to stay on the right side of this. Intent counts for a lot.

Good luck!

@Upen Patel I know this is a long shot but how about this for @David Healey  could he name his unit in the triplex as his secondary residence so he can purchase the new property as a primary residence.  Then he could AIRBNB his triplex unit since he could be potentially monitored if he is renting all of his units.

@Jackson Pontsler , I've been told in the past that a secondary residence (e.g., vacation home) requires a certain distance from the primary...generally a couple hour drive away.  

I think @Jonathan R McLaughlin hit the mark.  It'll probaly take you 45 - 60 days to close on your new property which will be in Aug / Sept timframe.  I believe you met the "owner occupy" requirement by living there for the last 6 months.  Circumstances change.  Just disclose everything to the new bank.  If you get a great lender, they can do some really creative things to close a deal.  Best wishes!

Originally posted by @David Healey :

Is there any way to change the Occupancy clause after a refinance? We purchased a Triplex in Salt Lake City, UT in January of 2017 on an FHA loan, put some sweat equity in it over the course of a year and refinanced out of the FHA to a Conventional loan with with 25% down. We didn't have a great experience with the lender during the refi process. I then put an offer in on a property down town and my new lender asked me if our refinance required owner occupancy. I told her it didn't cause this was the whole point of our refinance in the first place which was to get out of PMI and so we would get to buy another property. So, she had me pull out my refi packet and sure enough it says we have to occupy for a year unless the lender put in writing that weren't required to. This fact was never explained to us, our lender never asked us if we intended to occupy. This is a big, 12 month problem for us. The loan is now sold to FNMA. Is there any way to get the occupancy changed without having to refinance again? Thanks in advance for your thoughts.

If it's really a big problem, refinance again to a non-owner occupied loan.  Watch your debt ratio because it could blow you out of the next purchase.