Question: I am in the process of purchasing my first rental a duplex. This will actually be my first property purchase at all. My problem and question is I at the moment live in a employer provided house where I have been for 6 years and pay no rent and do not show any compensation for rent from my employer as it is agriculturally based and I live on and manage their farm. My problem is I can not a a non-owner occupied loan as I do not own another property. I had already been approved for the loan as non-owner occupied until the lender noticed this. They are now suggesting I go owner occupied. If I get a owner occupied loan but, never live in the propery what problems may I end up encountering. Or will I be better of evicting one of the teneants (which I really do not want to do) as both sides are currently rented. And “live” or act as I live in one side for awhile and then “decide” I do not really like living there and move back to my free house?
Answer: If you go “owner-occupied”, and at any time you move out, the lender is within their rights to call the loan due, payable in full.
The concern that they have is not where you live, but how much you pay for housing. If you lose your job, you have to live somewhere. That somewhere is going to cost money, perhaps $500 to $1000 per month in a conventional apartment. They are concerned that if you suddenly lose a job, then add $500 to $1000 per month in living expenses, that you will not be able to pay the duplex loan. The lender apparently is not willing to take that risk.
I would start the lending process at a different lender. Perhaps someone else will take the loan. Your other option is to go back to your current lender, and ask what it would take for them to write the loan as non-owner occupied. Perhaps if you put down more downpayment that would help.
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