Hey! So we are new to being landlords. We have people renting our home but I’m not sure how to go about telling our Mortgage company that we have people renting. How do I switch it from a personal to a rental? Am I going to be in trouble for not notifying them first? This is our first rental ever.

The mortgage company won't really care as long as they keep getting their mortgage payments.  You CAN change your insurance from homeowners to "dwelling" which removes the personal content coverage and save some money (it's on the renter to insure their personal property).  

Who DOES care is your taxing authority if you are getting a homestead exemption.  You should let them know... because they will figure it out by cross referencing where you live now against where the homestead exemption is, and they will go after you for any savings you got that you shouldn't have.  On the down side, this will definitely increase your taxes on the property... but hopefully if you own a new house, you will just move your homestead exemption to that one and save there.

As for your mortgage company, they still have you on the line for the note / mortgage, and as long as you don't give them a reason to come after you (ie. quit paying your mortgage) you will never hear from them about your property being a rental. 

Randy

The insurance for a “dwelling”  is what worried me most bc I informed my insurance agent and she suggested changing it to dwelling but not before notifying the mortgage company. I’ll make that call tomorrow.

As far as I’m aware, PA does not have a homestead exemption. ill have to do more research on that.


our tenants pay rent on the 1st every month, no problems there paying the mortgage with that.

thank you for helping me! I truly appreciate it

I personally wouldn’t call the mortgage company.  I don’t think there is a reason too, and like the saying goes, it’s probably better to ask for forgiveness than Permission.  If you are in doubt, read through your mortgage paperwork, but I don’t think you will find anything that says you must notify them.

When you buy an investment property there’s always a lot of paperwork about assignment of rents in the event of default.  My guess is that if you do call them they could have some sort of protocol that might trigger some of that investment paperwork... but as far as I know, mortgages are sort of “at that time” type of instruments.  I have had a personal house I rent out for 10+ years and have never had one flinch from the lender.

Just like buying your car and then driving for Uber... yeah, you are using it differently than initially intended, but only the insurance company is going to care.  The lender is relying on the insurance company to protect them in the event something happens to the car, and likewise the house.

Randy 

We never intended it to be used as an investment property but life changes and we moved so we figured we’d rent it out to see how it went. My in laws use their house as a triplex and they’ve only ever notified their insurance agents of the change.

The car analogy is great!

Generally when signing the mortgage paperwork there is a statement that you will live in the house for a year, or something like that. Once you have done that you are good. Notify the mortgage company of your new residence address. Also change to rental insurance, rather than primary residence. Mine is actually cheaper for a rental than when it was my residence.

We lived in the house for almost 2 complete years. It was around 1.8-ish years.

Thank you! I appreciate all of the advice.

@Tiffany Goglin

You DO NOT need to tell the mortgage company. In fact you should make sure all documents that are related to the bank goes to a PO BOX so your tenant does not see them.