Primary residence question

[Jacob McCann]

Hello, BP!

I have a question, looking to buy my first house and I already got pre approved and found a potential deal I plan to make this home my primary residence, so I can put down 5%. The problem is I’ve found a off market deal and the owner wants to live in the house till he passes away (he has stage 4 cancer) so unfortunately the doctors said not long. I would buy the house and allow him to live there maybe charge him very low rent to help me pay the mortgage and still pay rent where I’m currently staying. My question is am I allowed to do this? I really do plan on making it my primary residence after he passes.

[Frank Chin]

Normally, "owner occupied" mortgages require the owners to live in it one year, if that's what you got approved for. If you're waiting for the seller to die in this off market deal, then buy it and move in, it should be OK. But you can't use an OO loan to do the deal at the present time, but an NOO one, or a portfolio loan.

I had a similar problem some years back, in the 90's when OO loans require occupancy of at least 2 years. I found and bought a foreclosure at auction a few months after, a much nicer and larger house that I wanted to move to. I was told if I did that, I would be in violation of my OO mortgage, if I didn't live there for two years.

Took me a while to get the foreclosure house ready to move in, and my first property fixed up to be rentable, but I still moved and rented out my home before the 2 year requirement. I took the chance they won't find out, and took care by still using the home I moved from as my mailing address in the interim.

So these are the issues you should be aware of. BTW, the foreclosure bank granted me a portfolio loan so I won't have two OO loans approved within a short period on file which will raise red flags if anyone checks.