Closing a New Home Purchase!

[Brian Moss]

I am in process of closing on a new home which the builder is currently building. Expected closing is mid-August’21. The builder has their own mortgage co. with whom I would get about 3% incentive towards loan closing costs. When I signed up for the property, late last year, it was going to be a primary home. Things changed and I would still buy the property but now as a rental (investment) property.

Can the builder or their mortgage co. object to my closing?

If I close the prop as a primary home and turn around and rent it out….I understand there can be “owner occupied” restrictions from the lender. Do lenders really enforce those restrictions? How long should I wait to rent it out to avoid any issues?

If I take a primary home mortgage, how soon can I refi into an investment prop loan from a different lender to avoid any issues?

If I take an investment loan from Builder’s Mortgage co. so I can get the 3% incentive, can the lender and builder cause problem during closing since it’s not a primary home anymore?

Alternatively, I can close the prop from Builder's Mortgage using a primary home ARM. I hope that qualifies me for the 3% incentive...need to check on that. How soon can I refi the ARM into an investment property loan? Any restrictions from future lenders?

Another option, I can also pay cash using HELOC + loan from my 401K and then turn around and refi into an investment prop loan. Tho I would miss out on the 3% builder incentive and also have to repay the Title Insurance costs? Any suggestions on executing this type of multi transaction and reduce my closing cost in terms of Title+doc fees? Any restrictions from future prospective lenders for the refi? Currently my HELOC has a lower rate than the rates I am getting for investment prop loans. So this might be better option to wait if the rates go down again and then refi into investment prop loan.

Any guidance I can get from you on closing this transaction, will help!

[Peter Walther]

I wouldn't be surprised if your builder's mtg co is not a lender but is a loan broker.  That is the loan will be funded by the actual lender and not the builder's co.  If true, then the builder's co would need to check with the lender and see if they do investor loans.  If they do I suspect the interest rate and points will be somewhat higher because of the added risk that if you experience money problems in the future you'll be more inclined to walk away from an investment property then one you live in.