Homeowner forced to rent but mortgage company limits renting to 3 years

Hi: we are moving out of state after purchasing a home in Brooklyn. Out of courtesy I called our homeowner’s insurance to inform them of our new situation. Insurance company asked that we switch from a Homeowner’s policy to a Landlord Policy and also asked that we verify with our Mortgage company that we were allowed to rent.
Our mortgage company granted us a maximum of 3 years for our home to be rented to tenant.

Is this common? Have you had a similar experience? What if I stick with my homeowner’s insurance and mortgage, what are the risks?

Thanks for your help.

Melanie

brooklyn2011

in Landlord 13 years and 11 months ago

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callalily | 13 years and 11 months ago

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Great answer from Adam.

adam_dahill | 13 years and 11 months ago

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How long have you had the mortgage? Is it an FHA mortgage? What bank holds the mortgage?

You need to review your note that you singed. Is there a clause stating the 3 year maximum? It doesn’t sound like a typical note and plenty of people leave a property (called a departure property) and it doesn’t affect your loan.

It sounds like the lender is trying to get you to either refinance to a INV property loan or pay off the loan.

I would be highly suspect. If you didn’t sign anything regarding the 3 year provision I would ignore the lender. They do not have a legal leg to stand on.

-Adam Dahill
WCS Lending

BHS | 13 years and 11 months ago

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Wow, I never thought of this as a problem. I would be very careful with the insurance since it would be a disaster if anything happened to the house and the insurance coverage was void because it wasnt owner-occupied. You might shop around for insurance asking what happens if you decide to rent the house, meaning would you have to change to landlord coverage. If they don’t make the distinction, then switch carriers. It seems unlikely that your mortgage company would find out that you were renting if the insurance policy didnt indicate it.

slopegirl | 13 years and 11 months ago

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seems fair, you bought the house to live in it, and now you’re not. I’m sure you can find another mortgage if you don’t intend to sell.