Hi Everyone, so I have a question and wanted to run it by the group to better understand what needs to be done in this circumstance. I'm fairly new to home investing, but my wife and I now own 2 properties in the same market and are hoping to add a third in the next year or so. Unfortunately, my ignorance led us to making a pretty big mistake - when purchasing our second home we had the intent on moving into it, however we never actually moved into the property that we purchased. Now the second property was bought and financed to be owner occupied, but ultimately it made more sense to turn this into a rental. Come to find out thats a big no no, and so I'm wanting to retroactively go back and make sure we're not exposed legally for doing anything incorrect. Any thoughts or notes on how we correct this? We've been in our original place for almost a year so we've owned this second place for about 11 months now. Any feedback or suggestions here would be really helpful since I want to avoid any legal issues and make sure we're in the clear!
Pretty sure the loan docs specifically ask if you're going to move into the residence.
I don't think you'll get in trouble, but yeah that's mortgage fraud and I recommend against it.
Safest bet might be to move in it for a year
Okay that makes sense - so best way to resolve is just log some time in the place then. Was wondering if I needed to contact the mortgage company and make any adjustments? We have the financial means to do that sort of thing and I'd rather just be in the clear.
@Anthony Brock It technically is mortgage fraud, but you'll likely not get in trouble if you had the intent to move in. I did the same sort of thing for my first property (I didn't know any better) and ended up refinancing it as a rental property to avoid any issues. But I like all my dealings to be on the up and up.
as soon as you change the insurance from a Home Owner to a Landlord policy they will usually notify the mortgage holder of the change.
Okay that's all helpful information - I'll contact insurance and have them make that change and then I'll do the same about notifying the insurance company to update things there.
@Danielle that makes a lot of sense - I'll look at doing that option so at least I'm in the clear here.