Lying About Primary Residence for a Refinance

[Cameron C.]

BP,

I have a situation I want to run by you to A) see if I'm doing anything wrong and B) understand if I should've taken action earlier...

January 2017 - I purchased a home in Pittsburgh with a 5% conventional loan as my primary residence

November 2017 - I relocated to Philadelphia to start a new career and had three friends (4BR house) sign a lease that would take me until the next full rental cycle.

I recently inquired about refinancing the loan and I was asked "Is this your primary residence"?  Obviously, it is not.  However, because I only have 3 individuals on the lease I'm wondering if it makes an incredible difference to pass a little white lie in this situation, as I would also like to use this income to qualify for a better refi.

I'm just confused as to why the lender would care about this during a refi?  It is clear that I didn't do anything wrong last year when purchasing, however, on the refi it would be a little bit of a lie to maintain the stance that I still live in the home.

Lastly, I'm curious if I had an obligation to the lender to inform them of my move in November?

Any help would be greatly appreciated!

Cam

[Jon Holdman]

Generally there is no issue with buying a house with an OO loan then moving and renting the house with that loan in place. Especially when you have a job related move to a different city.

However, now when you want to refi, telling the lender its owner occupied when its not is not a "little white lie". Its fraud. Interest rates are lower for an OO refi and the allowable LTV is higher. For example, Fannie Mae eligibility matrix says a cash out refi on a primary SFR is 80%. For an investment property its 75%. Will you get caught? Maybe, maybe not. If you do, the consequences will be more severe than the benefit you gained from the lie.