Refinancing rentals and second homes, answered plainly
Why does occupancy honesty matter?
Plain answer
Every mortgage application asks how the property will be used, and you sign that statement. Claiming a rental is a home you live in to get better terms is mortgage fraud and can lead to the loan being called due and other legal consequences. If your plans change after closing, ask the lender or servicer how the loan's occupancy terms apply.
Last reviewed against the primary sources listed below.
What you certify
- How you will use the property at closing.
- For a principal residence, usually that you will move in within a set period and live there for a time.
Plans change
Job moves and family events happen. Keep records of why plans changed and ask your servicer.
Landlords also ask
What happens if I say I will live in a house and then rent it?
If you intended to rent it all along, that is occupancy fraud. If your circumstances truly changed later, check the loan's occupancy terms and keep documentation.
Can I convert my second home into a rental?
You can change how you use it, but the existing loan's terms still apply. Ask the servicer.