Convert Home to Rental - Would lender call in the loan?

[Patrick Farley]

My wife and I are moving out of state.  New home purchased under my name, with current home in my wife's name.  We aren't having much luck trying to sell our current home and the rental numbers are better than expected.  

Plan is to rent for 2 years then sell to avoid capital gains, but do we need to notify the lender or do we run the risk of them calling in the note?  We are set up for auto-pay, so I know some would suggest they don't care as long as they're paid on time.  With the notes in separate names, is there anything else we need to consider with financial liability?

[Andrew Garcia]

Hi @Patrick Farley, renting out the home will not cause the note to be due. As long as you are paying the mortgage, they will not check or care.

I have never heard of a servicer calling a loan due because you moved out of a home. 

As long as you have lived in the home for at least a year after closing, you should not have any issues.

Hope this helps! Let me know if I can be of any assistance.

[Manny Vasquez]

I also agree with @Andrew Garcia.  In my 17+ years as a professional Realtor, former lender and investor, I have never seen a mortgage company call a loan due because you put a tenant in the house.  Just make sure you keep making your payments on time and you can keep the same loan until you pay it off if you'd like.

[Rodney Sums]

You're moving out of state. Depending on why, you should have an acceptable reason for not fulfilling the one year obligation to live in it as your primary residence. Moving for your job is an example. That should satisfy your concern about getting your loan called. Where your reason becomes more relevant is if you want to finance a new property with the low down payment and rate you'd get for it being your primary. 

As for capital gains did you live in it at least two years?  Confirm with a tax specialist regarding your options. You may be able to wait longer than you planned. 1031 is another option if your situation doesn't allow you to avoid capital gains. 

[Basit Siddiqi]

You normally only have a requirement to live in the property for one year. After that, you can basically do whatever you want.