Refinancing house - help!!

[sookie]

Ok, thanks to everyone who is going to look at this thread.
We have a home that we own. It is the ONLY home that we (my husband and myself) own. Because of our jobs and my husband's school, we have relocated down a few hours away from it and we are TEMPORARILY renting this home out. So, I called to refinance this house and they are telling me the rates will be awful because it is an "investment" property! And the awful rates - are with points!!
i'm so frusterated. Any ideas, disboard friends??

 

[mrsklamc]

Call and talk to someone with a credit union. We thought we were out of luck to refi and we got a great deal through a credit union.

 

[sookie]

we were going through a credit union!! do you have a name of a good one? lol

 

[mrsklamc]

not unless you're in Indy but we found ours through checkingfinder.com

 

[kathie859]

Most lenders require borrowers to sign a document at closing confirming that 1) the property is owner occupied and 2) not for sale. If the property is now investment property, different underwriting guidelines (and rates) apply. This is all part of the mortgage fraud issue. The lender that I work for has a document with the FBI insignia on it that addresses the penalties of mortgage fraud (specifically saying a property is owner occupied, when, in fact, it's investment property). So, OP, it doesn't matter if the property is the only real estate you own--that isn't the question--it's the occupancy issue.

 

[sookie]

Why do they care if the home is rented out or if the home is for sale?

 

[bdcp]

Why do they care if the home is rented out or if the home is for sale?

Mainly because an owner occupied house is less likely to go into foreclosure and more likely to be maintained properly so it retains it's value. Interest rates are lower on owner occupied homes. Regulations concerning each type of property and mortgages are based on whether the owner or a tenant occupies the home.

 

[Swimalie]

Mainly because an owner occupied house is less likely to go into foreclosure and more likely to be maintained properly so it retains it's value. Interest rates are lower on owner occupied homes. Regulations concerning each type of property and mortgages are based on whether the owner or a tenant occupies the home.

Exactly. Rented out homes take other financing options. My sister and brother in law own several income properties and have to get different financing on them than on their 2 live-in homes.

 

[msmayor]

Why do they care if the home is rented out or if the home is for sale?

To add to what others said, it also helps ensure that there is enough cash to pay the mortgage.

When we rented out our townhouse a few years ago we were required to present a fully-signed lease for our tenants that ran at least 12 months to show stability. It also had to be rented for a certain $$ amount to ensure that, combined with our current income and mortgage on our owner-occupied home, we could pay the mortgage on the townhouse.

The equity rules are different, as other posters have said the rates are different too.

There is not much you can do to avoid the "investment property" tag and corresponding lending rules in this situation.