refinance

How to refinance a house you're renting out

Refi and intent to occupy
Refi and intent to occupy © Sandra.Matic/Shutterstock.com

Homeowners who want to move out and rent out might be tempted to sneak around these issues by refinancing before they vacate their current home. That's a sensitive subject because it involves intent and loan fraud.

Technically, a borrower must intend to occupy the property and sign an affidavit to that effect at closing to obtain a new owner-occupied loan. Yet Parkes says intention is "subjective and fluid."

"You could intend (to live there)," he says, "and then get a job transfer or find out your wife is pregnant and want to move and upgrade to a bigger house. That gets into a gray area. You can intend a lot of things."

One year of residency is often cited as a guideline to determine intent to occupy. But that's not an absolute rule.

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
HOME EQUITY STRATEGIES & ADVICE NEWSLETTER

Advice for homeowners looking for options to use their home’s equity wisely. Delivered monthly.

advertisement
Partner Center
advertisement

Connect with us