We recently relocated from NC to VA with my husbands job. His co. agreed to pay our mortgage in NC for 6 months. The house is beautiful, well-priced, etc, it's just a bad market where the house is and it still hasn't sold. We are considering using the property as a rental, but don't know where to start. We are currently renting in VA and want to be able to purchase another home there. Our questions are: 1) can we use the home in NC as a rental under the existing mortgage 2) what impact does that have on obtaining another mortgage for a home in VA? We are pretty much clueless on what to do and where to start. Any help/advice will be appreciated.
Full Version: using property that won't sell as rental?
We recently relocated from NC to VA with my husbands job. His co. agreed to pay our mortgage in NC for 6 months. The house is beautiful, well-priced, etc, it's just a bad market where the house is and it still hasn't sold. We are considering using the property as a rental, but don't know where to start. We are currently renting in VA and want to be able to purchase another home there. Our questions are: 1) can we use the home in NC as a rental under the existing mortgage 2) what impact does that have on obtaining another mortgage for a home in VA? We are pretty much clueless on what to do and where to start. Any help/advice will be appreciated.
1mommytothree:
Let me see if I can answer your questions. Take into consideration that I am not a residential lender and that these are educated guesses.
1) can we use the home in NC as a rental under the existing mortgage
Well in order to find that out you are going to have to get a hold of a copy of your mortgage and look for something called either and “occupancy clause” or “occupancy covenant”. This will determine how long you have to live in the property before you can rent it and not have to worry about being in default of the terms of the loan. I am not saying that the mortgage company would call the loan if you rent the property before the clause expires, but following the terms as specified in the clause keeps you legally protected.
I just took a look at my own mortgage and the “occupancy covenant” requires that I live in my property for a year. I think that is pretty standard, but I have heard that they can be as long as three years.
2) what impact does that have on obtaining another mortgage for a home in VA?
Your debt to income ratio will be affected as long as you are responsible for the mortgage payments for the NC property, and you can not offset it with rental income. In other words.... is bad
Hope this helps.
Let me see if I can answer your questions. Take into consideration that I am not a residential lender and that these are educated guesses.
1) can we use the home in NC as a rental under the existing mortgage
Well in order to find that out you are going to have to get a hold of a copy of your mortgage and look for something called either and “occupancy clause” or “occupancy covenant”. This will determine how long you have to live in the property before you can rent it and not have to worry about being in default of the terms of the loan. I am not saying that the mortgage company would call the loan if you rent the property before the clause expires, but following the terms as specified in the clause keeps you legally protected.
I just took a look at my own mortgage and the “occupancy covenant” requires that I live in my property for a year. I think that is pretty standard, but I have heard that they can be as long as three years.
2) what impact does that have on obtaining another mortgage for a home in VA?
Your debt to income ratio will be affected as long as you are responsible for the mortgage payments for the NC property, and you can not offset it with rental income. In other words.... is bad
Hope this helps.
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