Can I house hack my 2nd Property immediately after a Refinance?

Question

I've been living in my current SFR for a year and a half now. I renovated the property while also adding additional square footage from my own cash proceeds. I would like to replenish my cash I put in by doing a refinance cash-out and taking out some equity and using some of the cash-out proceeds for my next home purchase.

However, I read somewhere that if I refinanced, I may have to wait 6-12 months from the initial date of the refinance as there may be a Owner Occupancy clause with the new lender. This would conflict with my plans since my goal is to purchase another home before 6-12 months.

Any advice would greatly be appreciated.

Greg Dorn · Answer

@Sam Stabler I second the point that mortgage occupancy fraud is the #1 form of fraud. There are also seasoning requirements for refinancing so you would be better to do a HELOC but you still need to ask about and confirm in writing if there is an occupancy clause. The other main thing is if you have a change in circumstance and can present a reasonable need to move you may be able to move early.

We refinanced just this year but are considering moving again because we are trying to have another child and would need the room.

Sam Stabler · Answer

Thanks for the reply, Stephanie!

This is our first home we've purchased, so we do not know all the regulations which is the reason why I asked. I was never aware this could even remotely come close to creating an issue, until I heard this very recently. I am a little upset because had i known there may have been a 12-month seasoning period, I would have refinanced a year ago.

Let me ask you this in that case: Do HELOC's also require 12 month seasoning if I were to use that instead of refinancing my 1st mortgage?

Thanks!

Stephanie P. · Answer

@Sam Stabler

The number one form of mortgage fraud in the country is occupancy fraud.  There's a 12 month seasoning period if you intend to use Fannie Mae, Freddie Mac or FHA.  Take the money, wait for the right house and then move after the 12 month period is up.