Stuck in my owner-occupied refi?

[John Turner]

Hi BP,

My wife and I recently finished up a refi on our primary home that we’ve lived in for a few years. An opportunity presented itself to move out of our home into my late grandmothers home and convert our house into an investment property. All’s going well until..

I realized that the owner-occupied clause within the covenant terms would apply, and we would be missing an opportunity waiting another 9-10 months. I wrote a letter explaining the situation, which was pretty quickly denied. Pretty boiler-plate letter, but they said they would not make an exception.

Do we have any other options? I’ve looked and can’t seem to find an answer.

Thanks!

[Jody Sperling]

This sounds a bit to me like an ethical question, but I'm going to leave the ethics aside and share what could be done, hypothetically, if you were to move and rent your current primary.

1) Nothing would have to change in the terms of your current primary loan, but you would have to accept that the current lender would send mail to that address for the first year. A slight inconvenience, but workable.

2) You would have to work with a second bank to obtain a loan for your new home, and accept a commercial loan, putting 20%-25% downpayment instead of the lower downpayment primary loans qualify for.

or) You could explore owner-financing or private money.

3) You would have to double up on insurance to be safe for the first year, because you'd want a second policy as a landlord since a homeowners would not cover renters. This would be expensive, and if the move is profitable, you won't mind the extra expense, especially in the long run.