Landlord Question and Answer Forum

My loan specifies that the house is my principle dwelling. Now I want to rent it out. Do I need permission from my mortgage company to rent it out?

READ all of your documents. Your note is the promise to pay back the money you borrowed under certain terms. The mortgage gives the home as collateral. Not reading through the documents and adhering to its terms can leave you open to penalties.

Posted by Denise S, PA on Wednesday, November 3, 2010

I agree with Denise... read your loan documentation first. In addition when applying for a new loan (assuming your going to need some place to stay) the 1003 application is going to define which is your primary residency. Which as your describing will be your new home with current one as a rental. For generalization here your only allowed one primary residence. Generally your current lender would be unaware and you would not be breaking any laws however if your insurance is escrowed via your lender when you go to change your insurance policy from primary to renter they are required to notify lender if payment comes from lender via your payments into escrow. Receive of insurance change and/or random internal audits of lender may flag then this, your current property and possibly a call to refinance your now rental property at usually a slightly higher rate. If the lender has a chance to make money, they generally will. A simpler solution (although I don't know your reasons to rent your current property) is to stay put and purchase a another property to rent out thereby elminating any issues with your current lender. You do not have to disclose to your current lender that your buying another property... unless of course they will know if you apply for the loan with them.

Posted by Management S, on Thursday, December 2, 2010