Posted by John P. (CO) on July 17, 2001 at 23:49:40:
Typically, an FHA loan only stipulates that you must buy the home as your primary residence, not that you must always live there. Re-check the wording on your papers. After you have resided there 3 years, who can claim you fraudulently purchased the house to use as a rental? FHA does have non-discrimination restrictions when you rent out a house on which they “insure” a mortgage (can’t refuse to rent to single people, etc.) but that should be the extent of it.
I live in Naperville, IL, and I’m considering selling my townhouse with a wrap-around mortgage and moving to another townhouse that I am purchasing on a lease-option. I’ve done lease options, but I’ve never used a wrap-around mortgage. I’ve got lot’s of problems with it, namely that when I purchased my home two years ago I knew nothing about investing in real estate. I just knew I wanted a home. The upshot is that I have a conventional FHA mortgage. While FHA did allow me to purchase my home with low $ down- It has an occupancy restriction- I have to live here legally. Can I get out of this clause by refinancing and then turn around and put a wrap around mortgage on the place? Is the bank going to balk? I don’t need the equity, so I could easily refinance for what I owe right now leaving about 10% - 20% equity in the property. Can this be viewed as a ‘down payment’ of sorts since I’d only be financing about 85%? Help me out if you can.