2nd home mortgage and investment

[James Kim]

Hi,

I was wondering if anyone knew what happens when you convert a 2nd home to a long term rental property? The second home mortgage has a good rate and I believe I have it classified as a home rather than an investment property. If I now started to lease out the 2nd home what risk or exposure would that cause to the 2nd home mortgage? Would i be forced to refinance? Could the lender call the loan? Do i even have to do anything? If i don't refinance that loan or anything to cause the lender to know the property is a long term rental,  would it not matter?

Thank you in advance for the help.

James

[Chris Mason]

If your intent when you took out that mortgage was to do with that property what you said your intent was for the 12 months that followed when you signed that paperwork, you're fine. Please reference paragraph 6 of the deed of trust you signed. 

If your intent was otherwise at the time you signed that paperwork, then you committed mortgage fraud and could go to prison. 

If you upheld your end of that deal, the lender cannot call the note due. 

It would not hypothetically be me (or anyone else here) that you have to justify your "intent" to as being true, it would be a judge appointed by someone elected by the voters, so there's no point in engaging in a series of "but what about if..." with me (or other posters), since I'm not (and I assume this is true of most others, as well) a judge. :)

"If i don't refinance that loan or anything to cause the lender to know the property is a long term rental, would it not matter?"

Assuming you believe in the value of insurance, that's not actually an option, rendering the question moot. Your insurance carrier will notify the lender when you switch up your insurance type/coverage/etc.