DOS

[Aznewguy]

If I have a home, written up as a owner occupied, but use it as
a rental for the first year I believe the bank could use that as a reason to have the mortgage paid in full. The question is how do you get around that?

The loan is in my wifes name, I was thinking in a few months getting a loan in my name to, in effect purchase it from her.

[kjenn]

The bank could come and ask for the loan to be paid in full.  Beyond that, if you purchased a home as Owner Occupied and are not using it as such, the Builder (if this is a new home) could take the home back and pay as little of 95% of your purchase price.

I assume you are in Arizona based on your name.  I sell a lot of homes here and the new home builders are getting very particular, even to the point of not allowing you to own more than one home.  I am not sure how that would hold up if someone took issue with it however.

If you home is a resell, it has been common practice for the Lender to verify occupancy once possibly twice during the first year.  

Good luck

KJenn

[Aznewguy]

Well it is a resale. Its a 80/20 loan, with the 1st ($128K)having a prepayment penalty. I was thinking of refinancing anyway and having the penalty added on to the new mortgage.
I do know the mortgage company will sell the loan off to someone else.

[kjenn]

Doing a refi may be good, but if you do a non-owner occupied loan (NOO) your interest rate will be marginally higher.  It will however allow you to do what you wish.  Is the prepay a reasonable amount of money?

Typically a prepayment penalty is incorporated into a loan in order to reduce your interest rate, I have represented many clients lately who had these, they are awful and do not allow you to shop the rates as actively as you may wish.

[Aznewguy]

Not sure exactly what the payment would be. $128 at 7.7% for 2 years. Im guessing 2 years interest.

[kjenn]

Typically most lenders will charge anywhere from 3-6 months interest, at $128k @7.7% that would be  $2463.99 if it is a 3 month prepay or $4927.99 if six month prepay.  

If the home is in the Phoenix area I am sure it has already appreciated more than that.